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Full text of "Nominations of Mortimer L. Downey III to be Deputy Secretary; Stephen H. Kaplan to be General Counsel; and Michael P. Huerta to be Associate Deputy Secretary of the Department of Transportation : hearing before the Committee on Commerce, Science, and Transportation, United States Senate, One Hundred Third Congress, first session, May 17, 1993"

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S. Hrg. 103-130 

NOMINATIONS OF MORTIMER L DOWNEY III 
TO BE DEPUn SECRETARY; STEPHEN H. 
KAPLAN TO BE GENERAL COUNSEL; AND MI- 
CHAEL P. HUERTA TO BE ASSOCIATE DEPUTY 
SECRETARY OF THE DEPARTMENT OF TRANS- 
PORTATION 



i 4. C 73/7: S. HRG. 103-130 

KoninatioDS of flortlner L. Douney I.. 



HEAKING 

BEFORE THE 

COMMITTEE ON COMMERCE, 

SCIENCE, AND TRANSPORTATION 

UNITED STATES SENATE 

ONE HUNDRED THIRD CONGRESS 
FIRST SESSION 



MAY 17, 1993 



Printed for the use of the Committee on Commerce, Science, and Transportation 



nconcrrnov ^' 
OCT 13 1993 

U.S. GOVERNMENT PRINTING OFFICE 
G8-087CC WASHINGTON : 1993 ■■''^''•''^^*^^^ ^^ULii^ LHQHpi'rW 

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For sale by the U.S. Government Printing Office 
Superintendent of Documents, Congressional Sales Office. Washington, DC 20402 
ISBN 0-16-041265-X 



S. Hrg. 103-130 

NOMINATIONS OF MORTIMER L DOWNEY III 
TO BE DEPITTY SECRETARY; STEPHEN H. 
KAPUN TO BE GENERAL COUNSEL; AND MI- 
CHAEL P. HUERTA TO BE ASSOCIATE DEPUTY 
SECRETARY OF THE DEPARTMENT OF TRANS- 
PORTATION 



4. C 73/7; S. HRG. 103-130 

inatloBS of Hortiner L. Douney I... 

HEARING 

BEFORE THE 

COMMITTEE ON COMMERCE, 

SCIENCE, AND TRANSPORTATION 

UNITED STATES SENATE 

ONE HUNDRED THIRD CONGRESS 
FIRST SESSION 



MAY 17, 1993 



Printed for the use of the Committee on Commerce, Science, and Transportation 




OCT 1 3 1993 



U.S. GOVERNME^^^ PRINTING OFFICE 



6a-087cc WASHINGTON : 1993 .^:''^^^*^i^ CijQLiij LjiQHpiQV 



For sale by the U.S. Government Printing Office 
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402 
ISBN 0-16-041265-X 



COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION 



ERNEST F. ROLLINGS. 

DANIEL K. INOUYE. Hawaii 

WENDELL H. FORD, Kentucky 

J. JAMES EXON, Nebraska 

JOHN D. ROCKEFELLER IV, West Virginia 

JOHN F. KERRY, Massachusetts 

JOHN B. BREAUX, Louisiana 

RICHARD H. BRYAN, Nevada 

CHARLES S. ROBB, Virginia 

BYRON L. DORGAN, North Dakota 

BOB KRUEGER, Texas 



South Carolina, Chairman 

JOHN C. DANFORTH, Missouri 
BOB PACKWOOD, Oregon 
LARRY PRESSLER, South Dakota 
TED STEVENS, Alaska 
JOHN MCCAIN, Arizona 
CONRAD BURNS, Montana 
SLADE GORTON, Washington 
TRENT LOTT, Mississippi 
JUDD GREGG, New Hampshire 



Kevin G. Curtin, Chief Counsel and Staff Director 
Jonathan Chambers, Republican Staff Director 



(II) 



CONTENTS 



Page 

Opening statement of Senator Hollings 1 

Prepared statement 2 

Witnesses 

Downey, Mortimer L., nominee to be Deputy Secretary of Transportation, 

Department of Transportation 3 

Prepared statement, biographical data, and prehearing questions and 

answers 3 

Feinstein, Hon. Diane, U.S. Senator from California 28 

Huerta, Michael P., nominee to be Associate Deputy Secretary of Transpor- 
tation, Department of Transportation 30 

Prepared statement, biographical data, and prehearing questions and 

answers 31 

Kaplan, Stephen H., nominee to be General Counsel, Department of Trans- 
portation 20 

Prepared statement, biographical data, and prehearing questions and 

answers 21 

Moynihan, Hon. Daniel, U.S. Senator from New York 1 

Schroeder, Hon. Patricia, U.S. Representative from Colorado 19 

Skaggs, Hon. David E., U.S. Representative from Colorado 19 

(in) 



NOMmATIONS OF MORTIMER L. DOWNEY III 
TO BE DEPUTY SECRETARY; STEPHEN H. 
KAPLAN TO BE GENERAL COUNSEL; AND 
MICHAEL P. HUERTA TO BE ASSOCIATE 
DEPUTY SECRETARY OF THE DEPARTMENT 
OF TRANSPORTATION 



MONDAY, MAY 17, 1993 

U.S. Senate, 
Committee on Commerce, Science, and Transportation, 

Washington, D.. 

The committee met, pursuant to notice, at 2 p.m., in room SR- 
253 of the Russell Senate Office Building, Hon. Ernest F. Rollings 
(chairman of the committee) presiding. 

Staff members assigned to this hearing: 

Mr. Downey: Donald M. Itzkofif, staff counsel, and Rebecca A. 
Kojm, professional staff member; and Grerri Lynn Hall minority 
senior professional staff member, and Emily J. Gallop and Susan 
Adams, minority professional staff members. 

Mr. Kaplan: Claudia A. Simons, staff counsel, and Rebecca A. 
Kojm, professional staff member; and Grerri Lynn Hall minority 
senior professional staff member, and Emily J. Gallop and Susan 
Adams, minority professional staff members. 

Mr. Huerta: Randolph H.M. Pritchard and Rebecca A. Kojm, pro- 
fessional staff members; and Gerri Lynn Hall minority senior pro- 
fessional staff member, and Emily J. Gallop and Susan Adams, mi- 
nority professional staff members. 

OPENING STATEMENT OF SENATOR HOLLINGS 

The Chairman. Good afternoon. The committee will please come 
to order. We have three important appointments for the Depart- 
ment of Transportation. And we would be delighted to hear from 
our chairman of the Public Works and Transportation Committee, 
Senator Moynihan. 

Please come forward here, Mortimer. 

If we keep Mortimer separated from Morton, we will be all right. 
[Laughter,] 

STATEMENT OF HON. DANIEL PATRICK MOYNIHAN, U.S. 
SENATOR FROM NEW YORK 

Senator Moynihan. Mr. Chairman, thank you for your courtesy 
in hearing us today, sir. I have the honor to introduce to you and 
commend to you the Honorable Mortimer Downey, who is the 

(1) 



President's nominee to be Deputy Secretary of Transportation. This 
continues a career in public administration in the field of transpor- 
tation which Mr. Downey has pursued now for some years, and to 
genuine distinction. 

He was able to take over the Metropolitan Transit Authority in 
the New York region in 1981, and left almost as popular as he ar- 
rived. [Laughter.] 

The Chairman. That is quite a feat. 

Senator MOYNIHAN. No one has done that with a subway system 
in our time, sir. And it ought to be encouraged. 

He is a transportation expert; that is, his applied experience has 
been in this field, but he is also, and perhaps more importantly, 
and I would like to say it, he is one of those who has devoted him- 
self to the subject of public administration, as a calling, as a honor- 
able and indispensible form of public service. He has brought dis- 
tinction to all his work. 

I commend him to you, sir, as a person who you will have been 
proud to work with, and I know it will be a rewarding experience 
for the committee, as well as for the Cabinet. 

The Chairman. Very good, sir. You can stay with the nominee 
if you please, sir, or if you have other engagements, we understand. 

Senator Pressler, do you have a question for Senator Moynihan? 

Senator Pressler. No. I just want to commend him for present- 
ing this witness. I have some questions for the witness, some tough 
questions. But I just wanted to greet my colleague. 

Senator Moynihan. Thank you, sir. 

The Chairman. Mr. Chairman, we thank you very much for your 
appearance today. 

Mr. Downey, you have experience in the field of the budget, and 
we worked with you when you were over there with the House 
Budget Committee. One of the real concerns of this committee is 
that transportation revenues are not being expended for transpor- 
tation. Specifically, in the Federal Highway Administration, you 
will find about $19 billion in revenues, and only $11 to $12 billion, 
or sometimes less is spent on highways, while the rest is spent on 
the deficit. 

For the Federal Aviation Administration, similarly, we carry 
about a $7 to $8 billion overrun there to help us with the deficit. 
And then we have to face up to that fact when we bring a so-called 
iobs and stimulus bill with monevs for FAA or for moneys for the 
highways, which we have not paid for. The very crowd that is howl- 
ing about funds for jobs and the stimulus program has already 
spent these moneys on their deficit. 

Please, let us get programs promulgated within the Department 
that will, in a judicious fashion, correct this situation. We have a 
backup, particularly at the airport and airways over the country. 
I have talked to Secretary Peiia on this score, and if there is some 
comment you would like to make, I would appreciate it. Thank you. 

At this point, I will put my prepared statement in the record. 

[The prepared statement of Senator Hollings follows:] 

Prepared Statement of Senator Hollings 

This afternoon the Commerce, Science, and Transportation Committee is holding 
a hearing on the President's proposed nominations for three critical positions at the 
Department of Transportation: Mortimer L. Downey of New York to oe Deputy Sec- 



retary; Stephen H. Kaplan of Colorado to be General Counsel; and Michael P. 
Huerta of California to be Associate Deputy Secretary. I welcome you all to this 
hearing. 

In January, when the committee considered the nomination of Secretary Pena, I 
outlined a number of the major transportation issues and challenges facing the De- 
partment. In many respects, our national transportation system remains the finest 
m the world, but in other areas, we now confront a troubling legacy of neglect by 
previous adtninistrations. Some say that the market should decide the fate of our 
transportation industries, but the fact is that, unless we take decisive action, the 
U.S. merchant marine, for example, soon may cease to exist. Our largest airlines 
may drown in a tide of red ink unless a workable policy framework can be formu- 
lated and implemented. In a time of burdensome fiscal restraints, our surface trans- 
portation infrastructure must keep pace and even be improved if the United States 
is to remain competitive in the rapiolv changing global marketplace. 

For fiscal year 1994, the President has proposed more than $40 billion in taxpayer 
funds for DOT programs. If confirmed, each of the nominees will be entrusted with 
assisting the Secretary in overseeing the appropriate expenditure of these fiinds, 
and with carrying out, under the Secretary's guidance, DOT's mission of ensuring 
a safe and efficient national transportation system. The task of the nominees will 
be a daunting one, but one to which they bring much knowledge and experience. 

Mr. Downey, as the nominee for Deputy Secretary, brings a wealth of transpor- 
tation, financial, and management experience. During his career, he has served with 
the Port Authority of New York and r»Iew Jersey, the House Budget Committee, as 
a Deputy Under Secretary with DOT during the Carter administration, and most 
recently, as chief financial officer with the Metropolitan Transportation Authority 
of New York. Given the traditional principal responsibility of the Deputy Secretary 
for managing the more than 100,000 civil servants and military personnel who serve 
in DOT, I am confident that his experience has prepared him for the tremendous 
challenges confronting the Department. 

Mr. Kaplan, if confirmed as General Counsel, will be the chief legal officer for 
DOT. The nominee brings to the position years of legal experience serving as attor- 
ney or legislative advisor at the local. State, and Federal levels of government. He 
is currently on leave from the law firm of Davis, Graham, and Stubbs in Denver, 
CO. Prior to this position, he served as city attorney for the city of Denver, as an 
associate and then partner at the law firm of Kelly, Haglund, Garnsey, and Kahn, 
and as an assistant and then first assistant attorney general for the State of Colo- 
rado. In his position as Denver City Attorney, Mr. Kaplan was involved in matters 
relating to the Denver International Airport. 

Mr. Huerta, if confirmed as Associate Deputy Secretary of Transportation, will 
serve as the Director of DOT's Office of Intermodalism, recently created under the 
Intermodal Surface Transportation Act of 199 1 to promote the development of a na- 
tional intermodal transportation system in the United States. Mr. Huerta has had 
significant experience with intermodal issues, having recently served as the execu- 
tive director of the Port of San Francisco and prior to that as the commissioner for 
the Department of Ports, International Trade and Commerce for the City of New 
York. He thus should understand well the importance of intermodalism and the 
challenges that he will face. 

I look forward to hearing from the nominees today. 

The Chairman. Mr, Downey. 

STATEMENT OF MORTIMER L. DOWNEY, NOMINEE TO BE 
DEPUTY SECRETARY OF TRANSPORTATION 

Mr. Downey. Well, certainly, Mr. Chairman, there is no shortage 
of needs on the highway side^ on the transit side and on the avia- 
tion side, and we will do our best to make our case that those funds 
that have been collected from the users, earmarked for that pur- 
pose, are spent appropriately to rebuild our capital investment. 

[The prepared statement, biographical data, and prehearing 
questions and answers of Mr. Downey follow:] 

Prepared Statement of Mortimer L. Downey 

Mr. Chairman and members of the Committee, I appreciate your timely response 
in scheduling this hearing on my nomination to the position of*^ Deputy Secretary of 
Transportation. I see this position as an enormous cnallenge but at the same time 



a great opportunity. It is a challenge in the sense that the safety of millions of 
Americans rests on the shoulders of the Department of Transportation, as does the 
responsibility for the movement of goods and people that makes our economy strong. 
It is an opportunity because I expect, if confirmed, to be part of a team that wul 
work with the Congress, with industry and with State and local governments to im- 
prove the Department's functioning and its contribution to the well being of our 
country. 

Moving into the Transportation Department at this time is a very exciting pros- 

gect. The issues it faces are important ones, and the time is right to build on the 
lepartment's strengths and make changes where change will emiance its contribu- 
tions. The President has given the general directions for that change and the Sec- 
retary of Transportation has set forth a specific agenda that will reauire all of our 
skills and attention. As it must, the agenda begins with safety in all of its facets, 
from the regulation of the automobile to the effective operation of the air traffic sys- 
tem to the protection of the public from such concerns as hazardous material spills. 
Issues of economic importance such as the health and competitiveness of our airline 
industry and our maritime industries are high priority matters. 

We recognize the significance of Transportation's activities and programs on the 
nation's economy at a time when jobs and economic growth are of paramount impor- 
tance. To this end, I expect to work with the Department's agencies to move their 
work quickly and effectively to contribute towards long term economic growth. The 
Department s activities can also generate real opportunities to apply the capabiUties 
of our defense industries towards civilian needs. Making this a reality will take new 
partnerships and innovative thought as to the role of technology in such areas as 
high speed ground transportation. 

At tne same time, we must be sensitive to our stewardship of natural resources 
and the environment. The far reaching provisions of the Intermodal Surface Trans- 
portation Efficiency Act and the Clean Air Act Amendments can form the basis of 
a new model of responsible transportation development in partnership with State 
and local government. 

Finally, two major themes of this Administration will affect everything we hope 
to do at Transportation. The clear call from the President and the Vice President 
to "reinvent government" and to use the skills and knowledge of government's em- 
ployees to generate the ideas behind "reinvention" creates real opportunities to 
think through what the Department does, why it is done and how the missions can 
be retooled to meet the expectations of those we serve. Concurrently, the most im- 
portant issue for all of us has to be people. Everything we do at Transportation re- 
lates to people and their needs. We must be sensitive to diversity, both in our work 
force and in the opportunities our activities create, and we must be always aware 
that the real purpose of all these activities is service to the public, not in an aggre- 
gate sense but in terms of individuals who must accomplish tneir daily tasks 

I believe that my background and my education have prepared me well for ad- 
dressing these challenges. I will soon complete my thirty-fiuh year in transportation 
work, with most of those years spent in the management levels of complex multi- 
modal transportation agencies. Most of my experience has been at the local level in 
agencies that deal directly with the travelling public, and in these agencies I have 
had the challenge of dealing with federal programs and regulations. At another time 
in my career, I served in Washington, first on Capitol Hill and then in the Executive 
Branch, and have first hand knowledge of how policies are developed and imple- 
mented at the national level. 

I look forward to working with this Committee and with the Congress on the is- 
sues that face transportation and I am optimistic that we can make progress in 
these important areas through a cooperative effort. I would be glad to answer any 
questions that the Committee has at this time. 



Biographical Data 

Name: Downey, Mortimer Leo, III; address: 218 Dalmeny Road, Briarcliff Manor, 
NY 10510; business address: 347 Madison Avenue, New York, NY 10017. 

Position to which nominated: Deputy Secretary of the Department of Transpor- 
tation. 

Date of birth: August 6, 1936; place of birth: Springfield, MA. 

Marital status: Married; full name of spouse: Dorothea Joyce Downey; names and 
ages of children: Stephen Michael, 28; and Christopher Sean, 25. 

Education: Phillips Academy, 1951-54, Diploma; Yale University, 1954-58, B.A.; 
New York University, 1962-66, M.P.A.; and Harvard Business School, 1988, Ad- 
vance Management Program (certificate). 



Employment: 6/58-12/58, Port Authority of New York and New Jersey, Manage- 
ment Trainee; 1/59-12/59, U.S. Coast Guard, Officer Candidate Ensign; 1/60-3/75, 
Port Authority of New York and New Jersey, Staff Assistant and Planning Adminis- 
tration Supervisor; 3/75-1/77, U.S. House of Representatives, Committee on the 
Budget, Budget Analyst; 1/77-3/81, Department of Transportation, Deputy Under 
Secretary and Assistant Secretary Counsel; and 4/81-present, Metropolitan Trans- 
portation Authority. 

Government experience: In addition to my employment noted above, I have served 
on various Department of Transportation task forces (1971-75) and on the Infra- 
structure Subcouncil of the Competitiveness Policy Council (1992). 

Political affiliations: As a condition of my employment at the Metropolitan Trans- 
portation Authority, I have not been permitted to hold political party offices over 
the last 10 years. 

Political contributions: New York Democratic Party: 1984, $50; 1986, $15; 1987, 
$15; 1988, $60; 1989, $75; 1990, $75; 1991, $50; and 1992, $50. Nita Lowey for Con- 
gress: 1988, $100; 1990 $135; 1991, $50; and 1992, $100. Democratic National Com- 
mittee: 1984, $250; 1985, $50; 1986, $50; 1987, $200; 1988, $225; 1990, $75; 1991, 
$300; and 1992, $100. Clinton/Gore Campaign: 1992, $500. Trudy Mason for NYS 
Assembly: 1992, $100; Sandy Galef for NYS Assembly: 1992, $100. Joel Schiavone 
for Governor (Connecticut): 1990, $100. Ossining Democratic Committee: 1984, $40 
and 1988, $50. Moynihan for Senate: 1988, $100. Dukakis/Bentsen Campaign: 1988, 
$500. Bob Edgar for Senate (Pennsylvania): 1987, $35 and 1986, $50. Sandy Galef 
for Westchester Legislature: 1985, $25 and 1989, $35. Richard Ravitch for Mayor 
(New York City): 1989, $350. Brock Adams for Senate (Washington): 1986, $500. 
Neil Goldschmidt for (Jovemor (Oregon): 1986, $200. Mondale/Ferraro Campaign: 
1984, $550. Birch Bayh for Senate Debt Retirement (Indiana): 1985, $50. Goodman 
for County Executive of Westchester: 1985,$20 

Memberships: American Society for Public Administration (past Pres., NY Chap- 
ter); American Public Transit Association; New York Municipal Forum (Board of 
Governors); New York Building Congress (Board of Directors); Transportation Re- 
search Board (former member, Executive Committee); Women's Transportation Sem- 
inar; Yale Club of New York Citv; National Democratic Club, Washington D.C.; Yale 
Sailing Association; Briarclifr Manor Health Club (Club Fit); St. Theresa's Church, 
BriarclifT Manor, New York; Block Island Resident's Association; Public Works 
Forum (New York City); Harvard Business School Club of New York; National Asso- 
ciation of Rail Passengers; Andover-Abbott Alumni Association of New York; and 
New York University Alumni Council (Chair, Public Affairs and Government Rela- 
tions Committee). 

Honors and awards: Yale Club of New Haven Scholarship, 1954-58; Magna Cum 
Laude Graduate, Yale University; Member, Pi Sigma Alpha, National Political 
Science Honorary; New York University, Lepesguer Award for Highest Academic 
Standing, MPA Program; U.S. Coast Guard OCS-USCGA Award for Highest Aca- 
deniic Standing; and Urban Mass Transportation Administration Fellowship to Car- 
nerie-Mellon Professional Program in Urban Transportation. 

Published writings: Articles: 'Transit Developments in Europe," published in 
Transit Journal 1974; 'Tactors Affecting Transportation Productivity," Traf^Tic Quar- 
terly April 1980; "Public -Private Financing of Transportation," Transportation Quar- 
terly April 1984; and Contribution to Transportation Chapter of "Cfhanging Amer- 
ica," Citizens Transition Project, 1992. 



Questions Asked by Senator Hollings and Answers Thereto by Mr. Downey 

GENERAL 

Question 1. How do you perceive the function of Deputy Secretary with respect 
to the modal administrations in the Department of Transportation (DOT)? Have you 
perceived any structural or institutional changes that are needed in this regard 
since you last served at DOT? 

Answer. The Deputy Secretary can, in my view, play an instrumental role on be- 
half of the Secretary in assuring that the modal relationships work smoothly and 
produce sensible policy and results on issues that affect them. Secretary Peiia has 
already institutionalized regular meetings of the Secretary's Office and modal senior 
officials to coordinate policy at a high level. I would expect the Deputy to play an 
important role in this group, also helping the Administrators obtain needed deci- 
sions, especially at the Office of Management and Budget and National Economic 
Council when routine contacts are not working. The Deputy Secretary can often be 
the point of contact or of influence to obtain high-level focus on issues that would 



otherwise be submerged, such as expediting major procurements that often are criti- 
cal to agency success, and can help set and follow up on a policy agenda. 

One great structural improvement that has been put in place since I was last at 
DOT has been the creation of a high-level, formalized Office of Intermodalism, head- 
ed by the Associate Deputy Secretary. This is a new Office, and I would like to see 
it in action for a period of time before suggesting further organizational changes. 
This Office has great potential as a forum lor cross-modal issues and coordination 
of major initiatives. 

Question 2. Please described the most significant management challenges pres- 
ently facing DOT, and how you intend to address these challenges, if confirmed. 

Answer. We are fortunate to begin with a Department that generally gets good 
marks-for management, although lam aware that the Inspector General has docu- 
mented cases where improvements can be made. The management area is of height- 
ened importance now, because of the President's emphasis on providing the "cus- 
tomer" better service, combined with the President's commitment to doing more 
with fewer administrative resources. His goals for conducting the government s busi- 
ness more efficiently, and with less staff, is one of the most important challenges 
the Department faces. 

If confirmed, I expect to make this area one of my high priorities. Specifically, the 
task is to think through what the Department does, why it is done, and how the 
missions can be retooled to meet the expectations of those we serve. The Depart- 
ment's current participation in the Vice President's National Performance Review 
is the foundation for that effort. 

Another major challenge will be to put into practical use the fruits of new tech- 
nology, where the President has placed great reliance for future economic growth. 
Secretary Pena has already transmittea a high-speed rail initiative to Congress, 
which will be considered by this Committee. Turning the proposal on paper into 
functioning new technology on the ground in partnersnip with states, localities, and 
the private sector will be a management challenge of the highest order, one the De- 
partment is eager to undertake. 

Other significant challenges include the continued focus on an effective procure- 
ment and acquisition effort for major department investments, the achievement of 
diversity goals in employment and procurement, and effective, timely, completion of 
regulatory initiatives. Ine Department has mechanisms to encourage these proc- 
esses and I will participate heavily in these processes. 

Question 3. What are the key management and financial administration insights 
you have gained from your recent experience with the Metropolitan Transit Author- 
ity, and how will that experience make you a more effective Deputy Secretary, if 
confirmed? 

Answer. While the scale of the two organizations — MTA and USDOT — is consid- 
erably different, they have some major similarities in terms of management and fi- 
nancial issues. MTA, like DOT, is a an aggregation of independently organized oper- 
ations. Each of its various subsidiaries and affiliates has an independent history, 
statutory framework and separate financial identity. The MTA Headquarters, much 
like the DOT Secretary's office, has the challenge of providing leadership and direc- 
tion so that common goals are achieved. 

Many of the techniques that have worked in MTA are applicable, and in fact are 
present to a significant degree in DOT. The key factor in arriving at consistent 
progress among our various transportation agencies and responsibilities has been a 
shared plan for long term improvement, a recognition of capital needs and a time- 
table for meeting them, and a joint and agreed upon strategy for operational fi- 
nances that reflected reality in terms of resource availability and priorities. Knitting 
all of these together was a recognition that accountability for results lies with those 
directly responsible for performance. Our operating Presidents, much like DOT's Ad- 
ministrators, are on the front lines, are accountable for results and should not be 
"second guessed" or "micro-managed" so long as the agreed-upon strategies are 
being carried out and the agreed-upon goals, including interim milestones, are being 
met. 

This same theory of accountability applies at each level within organizations. 
Functional and project managers must be given the latitude to carry out their as- 
signed tasks, but only after adequate time has been built in at the front end of ac- 
tivities and projects to define missions, generate realistic schedules and resource re- 
quirements, and set appropriate reporting systems in place. Within such a process, 
MTA (and I am sure DOT) can find it possible to achieve desired results, as well 
as making real savings in how work is done when the long term capital investments 
and the operating costs are taken into account. 

A second major similarity between MTA and DOT (including those aspects of the 
national infrastructure for which DOT has responsibility) is the capital-intensive na- 



ture of their systems. At MTA, we have been successful to a significant degree in 
renewing our capital plant through two basic strategies. First, we have been realis- 
tic in assessing our needs and maJcing those assessments credible for public decision 
makers. Second, we have attempted to be creative in ways to finance those needs, 
using a wide variety of techniques appropriate to various types of assets, useful 
lives, and types of potential cost recoveries. I believe that a similar set of strategies 
wiU be applicable to the capital intensive systems owned or financed by DOT. 

Finally, I think there is similarity in the need to set priorities and goals, directing 
one's efforts and resources in way that directs attention primarily to those actions 
that offer the most potential for meeting the major goals that have been set. 

Question 4. If confirmed as Deputy Secretary, what policy areas do you anticipate 
will be among your highest priorities? What are your overall goals and objectives? 

Answer. If confirmed, my role will be one that fulfills the Secretary's needs and 
priorities as he sees them. It is clear that the highest priority at the Department 
is the continued emphasis on day-to-day safety of all transportation systems. Im- 
provement of our major procurements, such as the current Advanced Automation 
System at the FAA, would be a major objective for the Deputy Secretary. With 
President Clinton's emphasis on improved service to the "customer" across govern- 
ment, I also believe there will be a greater need for anticipatory and close inter- 
agency coordination, such as the Department of Transportation coordinating with 
the Department of Energy and the Environmental Protection Agency, which soon 
may achieve cabinet status. My long experience in the "retail delivery" of transpor- 
tation services convinces me that the way we go about our business in government 
contributes as much to ultimate success as the introduction of dramatic new initia- 
tives. I would see my role in this regard as streamlining our methods at DOT. 

Question 5. What are your views with respect to the appropriate role of the public 
sector in fostering and ensuring the safety of our national transportation system? 
What new opportunities do you envision for public/private partnerships in transpor- 
tation? 

Answer. In response to Question 5, there has always been and will remain an ap- 
propriate role for the public sector in ensuring the safety of our transportation sys- 
tems for their customers. While some may argue that past regulation has been too 
prescriptive or otherwise heavy handed, I am convinced that the private sector can- 
not self-police itself entirely because of the pressures of competition. At the same 
time, Secretary Pena has stressed the need for quicker regulatory decisions and sen- 
sitivity to the situation of regulated parties. I agree with this approach to safety reg- 
ulation. 

I believe that there are a number of potential approaches to the public-private 
partnership, and that many of them have real potential for improving service to our 
customers and to the American economy. In a broad sense, the entire range of trans- 
portation services in this country represents a very real partnership between the 
private and public sectors, and a workable one. Unlike many economies, the private 
sector in America is dominant in many aspects of transportation. We do not have 
nationally owned railways or airlines, and even where we do have ownership of 
some services (such as Amtrak) we seek to have the service operate on a business- 
like fashion. 

At the same time, many of the key facilities, such as roadways, airports, port fa- 
cilities or public transportation systems, are provided by public, or in some cases, 
quasi-public entities. Even here, the vast majority of funds used in these highly cap- 
ital-intensive investments are ultimately the responsibility of the users, through 
trust funds, revenue bonds, or other similar devices. 

Additionally, there are obviously a variety of private opportunities generated each 
time public investments are put in place. More often than not, even where public 
operations of some facility or service make sense, it is supported by a supply sector 
that operates in the private sector to undertake construction, build equipment and 
provide a variety of support services. These arrangements, too, can properly be de- 
scribed as a form of public-private partnership. 

In general, it is my view that the current mix of responsibilities works well, and 
that there is room for a variety of successful approaches to be implemented as may 
make sense in particular situations. I do not see a need for the Federal government, 
in particular, to be directive or prescriptive as to how services are provided or what 
model of private and public roles make sense. Rather, the Federal government ought 
to be supportive of local decision making and the tailoring of specific outcomes that 
make sense. 



8 



SURFACE TRANSPORTATION 



Question 6. Please provide your views concerning the requirements for capital in- 
vestment in the Nation's surface transportation infrastructure. How can DOT en- 
sure that its public-sector investment decisions are made wisely? 

Answer. According to the Department's most recent report on the conditions and 
performance of the Nation's highways, bridges, and transit systems, which was is- 
sued last January, the total annual investment to maintain overall 1991 highway 
and bridge conditions and performance is $51.6 billion through the year 2011. The 
cost to maintain transit condition and performance, including the cost to meet new 
statutory obligations to serve disabled Americans and improve vehicular emissions 
and continue recent growth, is estimated at $3.9 billion annually through 2011. 
More transit investment will be needed if the goal is to re-balance the modal split 
and reflect the realities of constraints in highway expansion. 

In 1991, $36.1 billion was spent for highway and bridge capital improvements and 
$4.3 billion was spent for capital improvements to transit Those figures represent 
investment needs and expenditures from all sources. Such estimates need to consid- 
ered very carefully, and the DOT staff indicates it will be reviewing the methodolo- 
gies used in developing these estimates, but it's clear that our capital investment 
in surface transportation infrastructure has been falling below the levels needed to 
maintain conditions and performance. That is part of the reason why President 
Clinton proposed his program to Rebuild America and the reason why increases in 
surface transportation investment are prominent features in his proposal. Not only 
must we ensure that investment levels increase, but, as you suggest, we must invest 
wisely, and that is a priority for this Administration. Tools provided in the 1991 
ISTEA will help state and local governments make the necessary choices in their 
investments, and the Department will work with them to facilitate the process. 

The Department recently submitted a report to Congress suggesting allocation of 
transit new starts funds based on the factors set out in the ETA Act, such as cost 
effectiveness, environmental considerations, and local financial commitment, key 
factors in ensuring wise investment. An interagency team is at work looking at prin- 
ciples for ensuring wise investment in infrastructure on a government-wide basis. 

Question 7. Please describe your general philosophy with respect to the economic 
regulation of the surface transportation modes. Do you believe, as a general matter, 
that DOT should intervene before the Interstate Commerce Commission on matters 
of policy affecting the economic regulation of the rail, intercity bus, and trucking in- 
dustries? 

Answer. The deregulation movement began in the Carter Administration, but was 
a bipartisan eflbrt, including passage of legislation affecting air, truck, and rail serv- 
ices. I am aware of the significant economic gains from deregulation claimed by its 
proponents in government, industry, and academic circles. However, I am also 
aware that these gains have not been uniform throughout the industry. For exam- 
ple, some trucking companies, and their employees, have suffered because they 
could not adapt quickly to a deregulated environment. 

I am also familiar with claims that economic productivity will be enhanced by fur- 
ther deregulation at both the Federal and State levels. But I do not consider myself 
an expert, and before deciding on a plan of action concerning changes to economic 
regulation of the surface modes, I want to examine all the issues and impacts on 
shippers, communities, and employees. As far as reregulation is concerned. Sec- 
retary Peiia said in his confirmation hearing that reregulation is not on his radar 
screen; it is not on mine either. 

The Staggers Rail Act of 1980 appears to have been working very well, and I 
would not anticipate any major proposals for change in the rail freight sector. With 
regard to participation at the ICC, I believe that each issue needs to be examined 
for its merits, and that the Department should participate on especially important 
issues. 

Question 8. Increasing attention lately has been focused on whether antilock 
br^es and other safety improvements should be mandated for the trucking indus- 
try. What are your views on this question, and how, as Deputy Secretary, will you 
reconcile the overlapping policy interests in this area of the Federal Highway Ad- 
ministration (FHWA) and the National Highway Traffic Safety Administration 
(NHTSA)? 

Answer. With any new technology, the concerns must include whether it will per- 
form adequately in the environment of over-the-road trucking and whether the safe- 
ty benefits we can expect from it will justify its costs. Our attitude should be one 
of cautious optimism in dealing with new technology. I understand that the new 
technology has overcome past problems, that NHTSA is winding up operational 



tests, most of the industry has been involved, and the agency is close to starting 
rulemaking. 

NHTSA and FHWA have been working together to enhance trucking safety; the 
former with regard to the design and performance of new vehicles and the latter 
with regard to the equipment and operation of existing vehicles. I would expect to 
use the position of Deputy Secretary to ensure that the spirit of cooperation contin- 
ues to prevail. 

Question 9. Greyhound Lines plans soon to introduce a computerized reservations 
system for its intercity bus service. What critical policy issues, if any, in the inter- 
city bus industry should DOT monitor with respect to this development? 

Answer. The intercity bus industry is an extremely important one, especially in 
rural America. We must be particularly concerned about tne continuing availability 
of regular route intercity bus service to important segments of the population — the 
young, the elderly, and those with below average incomes — who have few viable al- 
ternative means of travel. Along with Secretary Pena, I believe that the intercity 
bus industry has a vital role to play, and it is important that we maintain and en- 
courage a safe, efficient, and connected national intercity bus network. Without 
thwarting sound business practices, we want do what we can to promote cooperation 
and connectability between Greyhound and the other carriers, and avoid the sort of 
competitive problems that have occurred with the CRS systems in the airline indus- 
try. 

Question 10. What are your views concerning the shipper hazardous materials 
(Hazmat) registration program instituted by the Research and Special Programs Ad- 
ministration? Should an exemption be provided for foreign-based hazmat shippers? 

Answer. I understand that the Research and Special Programs Administration 
has implemented the Congressionally mandated hazmat registration program in a 
timely manner. Although more than 26,000 offerers/shippers and carriers of hazard- 
ous materials have registered, RSPA believes that there are thousands more who 
should be registered but have not done so. I am told RSPA plans to increase out- 
reach efforts and also will be relying on civil penalty authority to encourage addi- 
tional registrations. 

Question 11. Please provide your views as to what steps DOT should take in 
order to foster intermodal synergies between and among the various modes. 

Answer. Secretary Pena has set intermodal synergy as a priority in conducting 
the Department's business, and I share this priority. I oelieve that this goal can best 
be accomplished through improved communication among the customers and provid- 
ers of transportation services, largely at the local level where problems can best be 
resolved. Tne provision of "seamless" transportation, whether for passengers or 

foods, boils down to common sense and consideration for what the customer seeks, 
'he Department of Transportation can best facilitate this process by listening to its 
"customers," whether they are users of the services, providers of service or recipi- 
ents of grants, and providing the flexibility in Department programs to meet "cus- 
tomer" needs. Much of this communication can best take place at the local and re- 
gional levels in the context of real world problems and solutions. If confirmed, I 
would expect to participate in those discussions and to encourage the necessary 
flexibility in Departmental thinking. 

Question 12. In the area of grade-crossing safety, how will you work to ensure 
that the overlapping jurisdiction of the Federal Railroad Administration (FRA) and 
FHWA does not impede continued progress and attention to this important safety 
area? 

Answer. If confirmed as Deputy Secretary, I would expect to have regular contact 
with both the Federal Railroad Administrator and the Federal Highway Adminis- 
trator. I would make it my business to see that their agencies work together to re- 
duce the number of casualties from rail-highway grade crossing accidents. 

The FRA has authority over measures the railroads take to enhance the safety 
of their operations at grade crossings, while the FHWA works largely through 
grants to states and localities to identify and implement grade crossing safety coun- 
tiermeasures. 

FRA has recently been engaged in rulemakings to ensure the proper operation of 
railroad safety equipment at grade crossings. I would press to see that such rules 
continue to receive high priority. The Department could also use the statutory pow- 
ers it has in awarding grants to ensure that grade crossing safety remains a major 
consideration with states and localities. I would also expect to work through organi- 
zations like Operation Lifesaver and the National Safety Council to remind the pub- 
lic of the need for caution at grade crossings. 

Question 13. What do you see as the appropriate role of intercity passenger rail 
in the national transportation system? What mission do you envision for Amtrak in 
this area during the remainder of this decade? 



10 

Answer. I believe intercity rail passenger service is a valuable, environmentally 
sound, integral component of our transportation system. The Department encour- 
ages its growth and development in a manner consistent with available budgetary 
resources. I support Amtrak's continued progress in the efficient delivery of service 
and its efforts to meet its capital needs. If those efforts are successful, Amtrak 
should be capable of recovering a larger share of its operating cost from users. 

Secretary Peiia and the new Administration place a special emphasis on rail pas- 
senger service improvements, including high speed rail in high travel density inter- 
city corridors, through the Administration's high speed ground transportation initia- 
tive. 

Question 14. With respect to the magnetic levitation (maglev) prototype develop- 
ment program, what do you believe are the key institutional issues to be resolved 
in order to ensure success of the program as authorized by the Intermodal Surface 
Transportation Efficiency Act (ISTEA)? 

Answer. Looking beyond the immediate time horizon, MAGLEV offers oppor- 
tunity for technological advance in the provision of high-speed ground transpor- 
tation services in certain markets. Testing its potential as called for in the ISTEA 
will require continued inter-agency cooperation, and may also require some modi- 
fications to assure an effective test of this new technology. 

MERCHANT MARINE 

Question 15. How do you view the value of maintaining a U.S. -flag shipping fleet? 
Do you believe that we need a maritime policy that will preserve our existing U.S.- 
flag shipping fleet and spur the growth of the fleet? 

Answer. The U.S. -flag merchant marine is an important contributor to our na- 
tional defense capability as well as overall economic security. Given the benefits of 
an active merchant fleet, a maritime policy that strives to preserve our existing 
U.S. -flag fleet is desirable. However, to the extent that policy is built upon direct 
Federal subsidies, then the cost of those subsidies has to be weighed carefully 
against the benefits. I have not previously been involved in matters involving the 
merchant marine subsidy program and will make if a high priority to become better 
informed on the subject. 

Question 16. Reform of the U.S. maritime industry has become the most signifi- 
cant issue facing that industry. The largest U.S.-flag carriers have stated they will 
be forced to register their vessels in foreign countries and crew them with foreign 
crews if reform is not attained this year. At his confirmation hearing before this 
Committee, Secretary Peiia stated that maritime reform was one of his top two pri- 
orities. What actions will DOT be pursuing in this area? 

Answer. In light of the recognized problems of the maritime industry and its im- 
portance to the national economy and defense, it is disappointing that budgetary 
constraints will preclude an Administration initiative on maritime reform this year. 
The Administration clearly recognizes that something basic is needed if we are to 
prevent the U.S.-flag merchant fleet from disappearing. The decision, based on par- 
ticularly trying budget circumstances this year, does not mean that maritime reform 
is being abandoned. I'm sure Secretary Pea intends to keep maritime reform high 
on his list for action. He believes it is essential that U.S. carriers and other trans- 
portation modes be able to compete globally. 

I understand that DOT staff are now waiting on completion of two studies, the 
Shipyard Study in October and the DoD Requirements Analysis in August, that to- 
gether will provide the basis for another look at the maritime issues. 

Question 17. The Jones Act mandates that trade between two U.S. ports be on 
U.S.-flag, U.S.-crewed, and U.S. -built vessels. What is your view of this law? 

Answer. Insofar as I understand its purposes, I support the Jones Act and believe 
it should be retained. 

Question 18. The U.S. careo preference laws require that all military cargo and 
up to 75 percent of other U.S. government-impelled cargoes be carried on U.S.-flag 
ships. There was concern recently that the Administration would seek to waive 
these requirements for the food aid that is being shipped to Russia. What is your 
view of the importance of the cargo preference requirements generally, and as they 
relate to the food aid shipments to Russia? 

Answer. Cargo preference is important for the strengthening of U.S.-flag mer- 
chant shipping and the interest of Doth the national economy and national defense. 
It also helps protect our ocean commerce from foreign domination, creates jobs for 
Americans and improves our balance of payments position. Shipments to Russia are 
being funded by U.S. dollars and it is reasonable to expect that the U.S. merchant 
marine industry should benefit from this movement of cargo. 



11 

AVIATION 

Question 19. The Airport Noise and Capacity Act of 1990 established a national 
phase-out date for Stage 2 aircraft. What ao you believe is the responsibility of DOT 
in assuring compliance with that date? How would you describe the authority of air- 
ports to control the noise environment? 

Answer. The Airport Noise and Capacity Act of 1990 (ANCA) struck an important 
balance between noise relief and aviation activity. It is the responsibility of DOT 
to maintain that balance and recognize and mediate circumstances that could inter- 
fere or delay ANCA compliance. 

Noise relief afforded by ANCA through scheduled phaseout of Stage 2 aircraft will 
be costly to the air carrier industry, but will ultimately reduce the population af- 
fected by significant levels of airjxjrt noise to minimal levels. The FAA indicates 
that the air carrier industry is on schedule for meeting the ANCA requirements, de- 
spite undergoing a period of financial stress. 

The authority of the airports to control the noise environment is as defined by 
ANCA. Airports wishing to pursue local noise or access restrictions, through other 
than voluntary agreements, must comply with substantial regulatory requirements 
of notice and analysis for Stage 2 restrictions. Airports seeking Stage 3 restrictions 
must also meet notice and analysis requirements, as well as obtaining DOT ap- 
proval of the Stage 3 restriction. All restrictions must continue to comply with pre- 
existing law. I support the continued effort towards voluntary agreements to resolve 
these issues at a local level. 

Question 20. Secretary Pefia recently announced that bilateral aviation issues 
would be considered by a group within the White House, which will include rep- 
resentatives of DOT. How will this approach affect negotiations? 

Answer. We expect that the interagency approach to consideration of aviation is- 
sues will have a positive effect on negotiations. As the U.S. is confronted with dif- 
ficult negotiating issues vis-a-vis our trading partners or our own constituents, the 
interagency group will assure that all interests of the Administration are reflected 
and balanced in the Department's important decisions. When there is a conflict be- 
tween agencies, it will be resolved so that the U.S. negotiators can speak confidently 
with one voice and support the national interests in negotiations. 

Question 21. A memoer of the House recently suggested an "investment criteria" 
for a range of transportation projects, including airport grants. The airport grant 
program has a series of set-asides created by the authorizing committees. Is DOT 
concerned that the investment criteria could lead to earmarking of the airport grant 
program, something not previously done? 

Answer. DOT welcomes the interest of Congress in utilizing formal investment 
criteria to allocate scare infrastructure investment dollars, but believes that Federal 
agencies and airport sponsors should retain flexibility in deciding what capital in- 
vestment projects should be undertake. Benefit/cost analysis/and/or formal benefit^ 
cost-based investment criteria have been used in evaluating FAA's major Facilities 
and Equipment (F&E) investments for the last two decades. Generally, the ear- 
marking of discretionary funding interferes with the best use of scarce resources 
and should not be employed. Also, the Clinton Administration has undertaken a 
government-wide analysis of how federal programs should make infrastructure in- 
vestments, an analysis that we should all have available as we address this issue. 

Question 22. There has been a great deal of emphasis on creating new transpor- 
tation systems, like high-speed rail. How do you see this new technology affecting 
the airline industry? 

Answer. In specific circumstances, high-speed rail can be an effective substitute 
for aviation service, particularly in corridors up to 600 miles in length where airport 
or aviation system capacity is near its limits and additional capacity may be infeasi- 
ble. One instance where this has occurred has been in the Washington-Boston cor- 
ridor, where a significant portion of the intercity trafiic is carried by rail. The Em- 
pire Corridor from New York to Buffalo, and especially its New York/Albany seg- 
ment, has seen significant growth with help from New York State. As I see it, the 
choice as to how markets are served should generally be driven by market and efli- 
ciency considerations, including the consideration of costs of activities. If the tech- 
nology and potential of high-speed rail is understood, a choice can be fairly and ac- 
curately made. 

The Administration's high-speed rail proposal specifically addresses the potential 
for service in specific circumstances for this reason. I understand the bill (S. 839) 
is now pending before this Committee and that Secretary Pefia will testify on it 
later this week. 

Question 23. Will you exercise oversight over the Federal Aviation Administra- 
tion's Advanced Automation System FVogram to ensure that it proceeds on sched- 



12 

ule? What steps do you believe are needed to ensure that the necessary improve- 
ments are maoe to the air traffic control system? 

Answer. I will, if confirmed, exercise oversight over the AAS program both 
through the Transportation Systems Acquisition Review Council (TSARC) which as 
Deputy Secretary I will chair and through regular briefings. However, OST should 
not be involved in the day-to-day management of the program. Rather, the FAA 
must maintain contact by establishing realistic schedules, managing to these sched- 
ules, and limiting the number of changes that are made during implementation. 

I am advised that FAA has taken steps to reform this process by establishing de- 
tailed guidelines for management of major acquisitions which should result in more 
clearly defined requirements, realistic schedules, and better cost control. I will over- 
see this process through the Department's TSARC. 

NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION 

Question 24. As you know, in the last Congress, authorization legislation for Na- 
tional Highway Traffic Safety Administration (NHTSA) was incorporated into 
ISTEA. ITie legislation requires DOT to carry out various programs and rulemaking 
proceedings involving vehicular safety. Passage of this legislation represented the 
first time that NHTSA had been authorized since 1982. (A) Please describe your 
general view on rulemakings and the role you believe the Congress should have 
with respect to DOT's rulemaking authority and activities. (B) How do you beHeve 
NHTSA's role in promoting highway safety can be improved? In particular, in which 
specific areas do you envision a greater involvement from NHTSA? 

Answer. First, I would like to say that I am comfortable with the iinportance of 
the issues for which NHTSA has begun rulemakings as a result of ISTEA. These 
are important safety issues that need to be investigated. As for the role of Congress 
in rulemakings, I find it unfortunate that the Congress felt that it could not rely 
on the Department to initiate or complete regulatory action on its own. This implies 
a lack of confidence in the Department's judgments and its priorities. I will work 
to improve relations between the Department and the Congress, so that we move 
forward efficiently. 

In addition to its important work in vehicular safety, NHTSA can improve on its 
highway safety mission by focusing on those activities that have shown the greatest 
promise to reduce death and injury. For example, among the most eflective highway 
safety efforts would be to promote increases in the number of vehicle occupants who 
regularly wear their safety belts and to reduce the incidence of drunk driving. 

Question 25. Please discuss generally your views regarding regulation of the auto 
industry. (A) What are your views regarding the role of NHTSA in the development 
and implementation of policies and regulations concerning safety and fuel economy 
standards. (B) What direction do you believe NHTSA should follow with regard to 
formulating an approach toward fuel economy standards in the future? 

Answer. In lignt of the importance of energy conservation and environmental con- 
cerns, one must support the concept of improved passenger car and light truck fuel 
efficiency. However, there are a number of studies, including studies performed by 
NHTSA, that raise concerns about the safety implications of smaller and lighter ve- 
hicles. I believe that NHTSA's role in the safety and fuel economy debate will be 
to contribute its technical expertise and experience in this area so that we can find 
ways to increase energy efficiency without compromising safety. 

Fuel economy standards are inevitably tied into broader policy concerns regarding 
energy conservation goals for the country as a whole, reducing America's depend- 
ence on foreign sources of energy, reducing greenhouse-gas emissions, improving 
economic and jobs growth, and enhancing the competitiveness of the domestic auto 
industry. A number of agencies besides NHTSA will be involved in formulating the 
Clinton Administration's approach toward future fuel economy standards. In gen- 
eral, I believe we need to look at cost-effective ways of increasing energy conserva- 
tion, while also considering environmental factors and the health of the domestic 
auto industry. 



Questions Asked by Senator Danforth and Answers Thereto by Mr. Downey 

AND Mr. Kaplan 

RENO air 

Question 1. Earlier this year, Reno Air, a new airline fiying from Reno to six West 
Coast cities, announced that it would begin Hying a Reno to Minneapolis route. This 
announcement prompted Northwest Airlines, which is based in Minneapolis, to de- 
clare that it would dm plicate Reno Air's service from Minneapolis to Reno and from 



13 

Reno to Los Angeles, Seattle and San Diego at prices below those of Reno Air. 
Northwest had abandoned the Reno-Minneapolis route in 1991 as unprofitable. Re- 
ports in the March 29 Wall Street Journal and the April 5 New York Times indicate 
that Secretary Pena met with Northwest's President, John Dasburg, and stated his 
intention to begin a DOT investigation of Northwest Airlines with regard to Reno 
Air. Northwest subsequently dropped its plans to fly from Reno to the West Coast. 
Were you involved in DOT's analysis of Northwest Airline's actions? Does DOT have 
guidelines when an investigation of anti-competitive action in-the airline industry 
should be launched? 

Downey Answer. I was not involved in the Department's actions in this situation, 
although I was aware of the press reports and that personnel of the Department 
were mscussing the issue. At this point I am not familiar with whether the Depart- 
ment has investigatory guidelines for these types of investigations, but I do know 
that there is a legal office, called the Office of Aviation and Proceedings, that I am 
told focuses on just these sorts of issues. As a general matter, I believe that strict 
enforcement of anti-competitive action is a necessary component of a system that 
relies on market forces. 

Kaplan Answer. I had the opportunity to sit in on several of the presentations 
and discussions regarding this issue. It is important to note that, while the Depart- 
ment has its own authority in this area, this particular matter included direct in- 
volvement of the Justice Department. It is my understanding that there is an ongo- 
ing effort to consider guidelines in this area. 

THE AIRLINE PREDATORY PRICING ACT OF 1993 

Question 2. I have introduced S. 770, the Airline Predatory Pricing Act of 1993, 
which would provide DOT with a procedure and standards to handle anti-competi- 
tive pricing conduct in the airline industry. Once a complaint that an airline has 
engaged in predatory pricing is filed, DOT would have seven days to determine 
whether to issue a preliminary cease and desist order. DOT would have 90 days to 
determine whether to make the order permanent. The legislation also provides ob- 
jective standards as to what constitutes predatory or destructive pricing. Would an 
established procedure and specific standards, such as those provided in S. 770, be 
helpful to DOT to settle predatory pricing claims? 

Downey Answer. In an area of long-established administrative practice such as 
this, where the financial prospects oi various air carriers can be substantially af- 
fected by new standards and processes, I believe that the committee hearing process 
could be particularly beneficial to determine the efiect of these proposed statutory 
changes. Under this approach, the Congress and Administration would have the 
benefit of hearing-from all sides as they developed positions on the legislation. 

Kaplan Answer. While I have not had the opportunity to review the existing proc- 
ess in detail, I am advised that the General Counsel's legal staff points to both Sec- 
tion 411 of the Federal Aviation Act of 1958 and to tne-Department of Justice's 
broad authority in this area as a substantial basis of existing authority to combat 
predatory pricing. Clearly, the Department seems interested in fostering healthy, 
lawful competition. 

FOREIGN INVESTMENT IN U.S. AIRLINES 

Question 3. On March 15, Secretary Pea approved a $300 million investment by 
British Air in USAir. This investment gave British Air 19.9 percent of USAir's vot- 
ing stock. British Air has indicated that it would like to increase its voting stock 
stake to 44 percent within five years. Under existing law, foreign entities many only 
own up to 25 percent of a U.S. airline's voting stock. Secretary Pea has announced 
his intention to begin negotiations on a new bilateral aviation agreement between 
the United States and the United Kingdom. The British have stated that they want 
the new bilateral agreement to allow British citizens to acquire a higher percentage 
of voting stock in U.S. airlines. The major objective of the United States in a new 
bilateral agreement is greater access to Heathrow Airport for U.S. airlines. I have 
introduced S. 771, the Airline Investment Act of 1993, which would allow citizens 
of a country to acquire up to 49 percent of U..S. airline's voting stock, if that country 
negotiates a liberal bilateral agreement with the United States. If Secretary Pena 
had this authority, would it be useful in his negotiations with the British on a new 
bilateral agreement? 

Downey Answer. As Secretary Pena has stated publicly, his objective is to win 
better bi-lateral agreements with other countries, and that the objectives of so-called 
"open skies" and our valid objectives in a particular case can be complementary. It 
appears that the new negotiations with the British are beginning well, and dearly 
this issue is of interest to the British. 



68-087 - 93 - 2 



14 

Kaplan Answer. The negotiation of bilateral and multilateral agreements is 
known to be a highly specialized area, oflen requiring the long view to reach suc- 
cess. I have been advised that issue is one which will receive attention from the new 
AirUne Study Commission. There are a series of fundamental policy questions that 
range from national security to our ability to compete globally. 

Question 4. On May 11, the New York Times reported that the Clinton Adminis- 
tration "has decided to invite air trafiic controllers dismissed in their 1981 strike 
to reapply for their former jobs * * *" Has such a decision been made? What is the 
rationale for this change in our long-standing policy on rehiring controllers who 
struck illegally? 

Downey and Kaplan Answer. As far as we are aware, a decision has not been 
reached by the White House. Secretary Peiia did coordinate the process among the 
cabinet heads of presenting the various options for a decision, but we are not pre- 
pared to comment further at this time. 

While we are not privy to the rationale underlying this policy process, it is dear 
from press reports that the President has indicated that the passage of time alone 
justifies giving the issue a new look. 

S. 412, THE UNDERCHARGE EQUITY ACT OF 1992 

Question 5. Senator Exon has introduced S. 412, the Undercharge Equity Act of 
1992, to end the costly litigation involving bankrupt trucking companies and ship- 
pers. By some estimates, outstanding undercharge claims may cost shippers as 
much as $32 billion. Nine Commerce Committee Members and I have cosponsored 
Senator Exon's bill. As Deputy Secretary and General Counsel of the Department 
of Transportation, will you review S. 412 and give us the benefit of your support 
for this needed legislation to end the harm these undercharge claims are causing, 
particularly to the many small businesses who are the subject of these suits? 

Downey and Kaplan Answer. We recognize that the shipper undercharge issue is 
a serious problem, one which is taking attention away from the day-to-day oper- 
ations of thousands of businesses, large and small. We need to address the problem, 
which will entail seeking an equitable way of resolving past undercharge claims and 
preventing new ones. 

We are aware that the Department is active in assessing Senator Exon's bill in 
the 103rd Congress as the follow-on to extensive analysis of the Senator's and 
Chairman Norman Mineta's efforts in this area in the 102d Congress. We under- 
stand that Chairman Mineta just recently introduced a bill as well. This is a par- 
ticularly knotty issue, involving the Interstate Commerce Committee and the courts 
as well, and it would be to everyone's interest to see a resolution. Secretary Pena 
is aware of the issue and the legislation and wants to play a constructive role in 
resolution of the dispute. If confirmed, we would be active participants in the devel- 
opment of the Department's position on this or related legislation. It is our sense 
that the Department supports an effort, involving all interested parties, to get this 
matter resolved. 

The Chairman. We have no proposed plan for the maritime in- 
dustry. And I have also had an opportunity to discuss this with the 
Secretary. What you have, in essence, is the presentation of a mari- 
time plan by the administration in the closing months here last 
year with no money. Perhaps it is because there is no money that 
there is no plan. But you cannot stand for the demise of the Na- 
tion's maritime industry to come on your watch. We have got to 
have some kind of plan up here, some kind of money. It is abso- 
lutely necessary. 

I might suggest that — I notice in defense, the 050 function as you 
and I would refer to it, has a lot of money — today the buzz word 
is "competitiveness," so they have a $1 billion line item in there to 
commercialize technology. Is that not wonderful that the Defense 
Department now is going to get into the commercialization of tech- 
nology? 

If they can find $1 billion for that, they can find $1 billion for 
American flagships that are so necessary to get us to a Desert 
Storm or wherever. And that is very important. The Coast Guard 
has to go to the Defense Department each year, as you well know, 



15 

in order to carry out its functions. So, if you can address those mat- 
ters, with your experience in the budget workings, it would be a 
big help to us. 

I think you and the other two nominations now before us are ex- 
cellent appointments. 

Let me yield to my colleague, Senator Pressler. 

Senator PtiESSLER. Let me ask just one line of questioning here. 
And that is the relationship between the Department of Transpor- 
tation, the FAA, and the National Transportation Safety Board. I 
know we have a lot of these players getting involved. We had a 
fatal small aircraft accident recently that claimed the lives of eight 
distinguished South Dakotans, including our Governor, George S. 
Mikelsen, and it turned out that on at least two occasions, the FAA 
had ignored urgent warnings from the National Transportation 
Safety Board regarding the safety of the propeller assembly model 
that happened to be on the plane carrying Governor Mikelsen and 
others. 

And just last March, the National Transportation Safety Board 
Chairman, Carl Vogt, warned that the failure of the propeller as- 
sembly could result in a catastrophic accident. But no warning was 
ever issued by the FAA. 

Now, in your position at the Department of Transportation, what 
role do you feel the DOT should play in its relationship with the 
FAA and the NTSB? 

Mr. Downey. Well, first of all, that was a very tragic event, and 
we have already expressed our condolences to the families of the 
people who were lost. In terms of lessons learned, I think it tells 
us: one, that the Congress was correct years ago in separating the 
Safety Board from the Department, so that it would make inde- 
pendent scientific recommendations for the various agencies in 
DOT. 

In my role, I will do my best to make sure that those agencies 
listen to the Safety Board, that the Safety Board and FAA and the 
other agencies of DOT communicate and reach quick decisions on 
what is best for the safety of the transportation system's users. 

Senator Pressler, Now, what is the current relationship be- 
tween the DOT and the FAA? 

Mr. Downey. The FAA is a agency within the DOT. Its adminis- 
trator reports to the Secretary. 

Senator Pressler. So, we do have responsibility fixed? 

Mr. Downey. Yes. 

Senator Pressler. Now, do you feel that the FAA, like the 
NTSB, should be an agency independent of the DOT? 

Mr. Downey. I do not believe so. I think there is a good argu- 
ment for FAA being inside the DOT to give it accountaoility to a 
Cabinet Secretary and to assure that its transportation invest- 
ments and decisions mesh with other transportation decisions for 
the other modes. 

Senator Pressler. I am sure that the FAA maybe had reasons — 
it did have a similar plane crash up in Utica, and it did have two 
letters — it seems unusual, the NTSB sent two letters and one 
warning and marked them urgent or some level, and the FAA did 
not act on them, even though they act on about 90 percent of the 
warnings sent by the NTSB. Why do you suppose that was? 



16 

Mr. Downey, I do not know the answer specifically to that. I do 
know that they are responsive in the vast majority of cases, and 
I think it is important that they do respond to urgent safety re- 
quirements of the Safety Board. 

Senator Pressler. I am mainly interested in learning the inter- 
relationship of all these agencies, and whether we need all of them, 
if they are all functioning, and if the public interest is being served. 
So, we have the DOT, the FAA — well, of course, the FAA is part 
of the DOT, it reports to the Secretary. 

Mr. Downey. Yes, it reports to the Secretary. 

Senator Pressler. So, basically, we are dealing here with the 
Department of Transportation and the National Transportation 
Safety Board. What about that relationship? Of course, the NTSB 
probably sends a letter on everything that it hears, and the FAA 
cannot act on everything, but is the NTSB functioning well, do you 
think? 

Mr, Downey, I believe it is, from my experience, both in DOT 12 
years ago, as well as experience with them in the transit field. 
They do a good job of investigating accidents. They do a good job 
of recommendations. And, for the most part, the things they rec- 
ommend are appropriate improvements to safety. 

Sometimes there are resource issues involved. Sometimes there 
are issues of balance. But, for the most part, the things they rec- 
ommend are of high importance. 

Senator Pressler. Yes. Well, I am not one to point fingers of 
blame at people when something goes wrong, without digging into 
it a little bit. And that is what we are trying to do. But the stand- 
ard that FAA has when they respond to NTSB seems to be a very 
inconsistent pattern. And you will be overseeing FAA, basically, 
will you not? 

Mr, Downey, Yes, Senator. 

Senator Pressler. I mean, the head of FAA will be reporting to 
you probably, essentially. 

Mr. Downey, To the Secretary. 

Senator Pressler, Would you assure me that you will look into 
this, and maybe you can submit for the record here your analysis 
of what happened in this case, and whether or not the FAA acted 
properly? Could you do that for this committee? 

Mr, Downey. We could do that, yes. 

Senator Pressler. I would not want to ask you to do it now, but 
what is the timetable on this nomination? When is it going to the 
floor? Can we get something by late today? 

Mr, Downey. We can get something. 

The Chalrman, Get it late today. We want to put it out this 
week. 

Senator Pressler. OK, great, I just want to look at it. Or you 
can give it orally right now if you want to, 

Mr. Downey, I would prefer to provide it later today, if we could, 

[The information referred to follows:] 



17 

Letter From Stephen H. Kaplan and Mortimer L. Downey 

May 19, 1993. 

The Honorable Larry Pressler, 
U.S. Senate. 
Washington, DC 20510 

Dear Senator Pressler: We appreciate the opportunity we had Monday to dis- 
cuss with you the aviation accident April 19 that took eight lives, including Gov- 
ernor Mickelson's, and the steps we can take to prevent another such tragic acci- 
dent. Small aircraft safety is and should be a priority at the Federal Aviation Ad- 
ministration (FAA). 

You expressed particular concern that the interaction between the FAA and the 
National Transportation Safety Board (NTSB) may have involved bureaucratic fric- 
tion that interfered with issuance of the appropriate airworthiness directive as soon 
as there was a basis for one. We have looked into the chronology in this case and 
found that the relationship worked as it was intended under statute, and that both 
agencies appear to have done their best with the information they had available. 
Triis is by no means suggests that further steps would not improve safety for the 
public. 

The NTSB was created by Congress to investigate transportation accidents, make 
determinations of probable cause, and make safety recommendations to the regulat- 
ing agency, in this case the FAA. Congress separated the NTSB from the Depart- 
ment in 1975 to help assure the independence of its accident findings and safety 
recommendations. The responsibility for issuing safety regulations and directives is 
lodged separately with the FAA, freeing the NTSB from any of the balancing of is- 
sues implicit in the regulatory process, but the FAA has a statutory duty to consider 
and respond to all NTSB recommendations on air safety. The record shows a very 
high level of positive response by the FAA to NTSB recommendations, with more 
than 90 percent of its urgent recommendations, and more than 80 percent of all its 
recommendations, adopted by the FAA. DOT's Inspector General has examined the 
FAA's record of response and found that, except in the case of the lowest priority 
recommendations, the FAA has, on average, responded to the NTSB more rapidly 
than its guidelines specify for response. 

Without making any ultimate judgment about the causes, we would like to review 
the facts leading up to the April 19 crash. The first evidence FAA had of a problem 
with the propeller in question was the loss of a propeller in flight from an MU-2B- 
60 aircraft September 27, 1991, followed by a safe landing. The specific model pro- 
peller had been in service for 20 years with millions of flight hours accumulated. 
The NTSB'S investigation led to an August 1992 recommendation to the FAA that 
it join with the propeller manufacturer in developing a nondestructive inspection 
technique to examine the inner propeller surfaces for the fatigue cracking that ap- 
peared to be the cause of the failure. The NTSB recognized that disassembly to ex- 
amine the inner areas could lead to maintenance-induced damage that be more seri- 
ous than the cracking if sought to locate. NTSB also recommended requiring an in- 
spection schedule of blades in service over 3,000. 

The FAA responded quickly to the August recommendation by advising the NTSB 
on October 26 that a review of relevant information was underway. Although not 
mentioned in the October 26 letter, the FAA had begun discussing a nondestructive 
inspection technique, as recommended by the NTSB, with the manufacturer. 

On January 4, 1993, the FAA provided its full response to the NTSB. The agency 
had examined all the relevant historical data on the propeller type and similar pro- 
pellers in use over three decades and found no comparable case of cracking. The 
manufacturer's testing showed that stress levels of tne propeller area in question 
were acceptable, and that no metallurgical discrepancies were found in the nub ma- 
terial. FAA reviewed the service history of the propeller and contacted propeller 
overhaul shops to gather any additional anecdotal information. No cracking at all 
had been reported in thousands of normal maintenance sessions. Because this led 
the FAA to conclude the 1991 case was an isolated incident, the FAA decided not 
to issue a mandatory inspection directive at the time. Significantly, no method had 
been (or yet has been) developed to permit inspection that avoids disassembly and 
the possibility of maintenance-induced damage. The FAA indicated it was continu- 
ing to monitor the service performance of this propeller. On March 4, the NTSB re- 
sponded and reiterated its view that a nondestructive inspection methodology 
snould be developed and applied. The NTSB also noted concern that the FAA had 
not seen a need to review the design and fabrication of similar propeller types. 

The FAA and the manufacturer have continued the search for an inspection meth- 
od that avoids disassembly and the risk of induced damage. Many methods, includ- 
ing x-ray, eddy current, and ultrasonic techniques, have oeen evaluated and found 



18 

unsatisfactory. The manufacturer has concluded that current technology is not at 
a stage where inspection can be accomplished without disassembly. 

When the April 19 crash occurred, involving an identical model aircraft, the FAA 
responded within 10 days by establishing that a pattern of fatigue cracking existed, 
and that inspection involving disassembly must be undertaken. In view of the poten- 
tial for damage in the inspection, the FAA has required that the inspection only be 
conducted at the manufacturer's factory laboratory. This step is intended to maxi- 
mize speed and consistency of data collection as well as minimize the possibility of 
maintenance-induced damage. The FAA continues to work closely with the NTSB 
on this issue, but the engineering and other data do not suggest an explanation for 
the cracking and fatigue. 

In our review of these facts, it appears that the two agencies performed appro- 
priately. Nonetheless, we look forward to working with Congress specifically on how 
the area of small aircraft safety might obtain greater emphasis. The accident statis- 
tics demonstrate that the safety record has steadily improved. The FAA believes 
that the high profile it gives small aircraft safety, such as its small airplane air- 
worthiness reviews and its positive safety outreach program, contributes to the im- 
provement. However, we should continue to pursue further improvement. 

We share Secretary Peiia's firm belief and the fundamental premise that the De- 
partment of Transportation is committed first and foremost to safety in the day-to- 
day operations of all modes of transportation. He strongly supports the NTSB in its 
role in the area and intends to monitor the response of all DOT agencies to the 
NTSB'S recommendations. 

In closing, we hope to have the opportunity to work with you and the Aviation 
Subcommittee on the continuing issue of small aircraft safety. 
Sincerely, 

Stephen H. Kaplan. 
Mortimer L. Downey. 

Senator Pressler. OK. Thank you. 

The Chairman. One final point, Mr. Downey. You might as well 
get the Secretary's input on the National Commission for a Com- 
petitive Airline Industry. I think the public service, the origin of 
airlines and airline travel should not be disregarded in the sense 
of being competitive. 

You know, that was the idea about deregulation, that they were 
going to be so competitive, that fares would be down, the service 
would be increased — and it has gone in the other direction. I get 
a Government rate, but for my wife, it takes $636 to travel from 
here to Charleston, SC. And you can look in the morning paper and 
travel to Frankfurt, Germany, and back, fi^om Dulles, for $279. 

You begin to see the ludicrous nature of what has happened. 
Then you have the entire set of new issues when the regulated air- 
lines begin to take over the deregulated. We have deregulated 
deregulators, so now we are going to the foreign-subsidized regu- 
lated airlines to invest in — and I do not say, necessarily, take over, 
but with that influence, I can tell you now, they are going to allo- 
cate to the foreign lines the lucrative routes that are making the 
money. 

We are so oversmart in Congress on how to run business that we 
are running it out of business. I can tell you that now. The Depart- 
ment of Transportation will want to have its input in there when 
they have this quick study, so that when the study is reported they 
do not say, oh, wait a minute, we did not think of this or that. 

We welcome you, and we appreciate your willingness to serve. 
We will keep the record open for any questions, but I would like 
to close it out and report it to the floor this week for confirmation. 

Mr. Downey. Thank you, Mr. Chairman. 



19 

The Chairman. Thank you for being here this afternoon. Now we 
have one distinguished Congresswoman and one distinguished Con- 
gressman, Pat Schroeder and Mr. Skaggs to introduce Mr. Kaplan. 

We welcome each of you to the committee. Congresswoman 
Schroeder, we would be delighted to hear from you. 

STATEMENT OF HON. PATRICIA SCHROEDER, U.S. 
REPRESENTATIVE FROM COLORADO 

Ms. Schroeder. Well, thank you very much, Mr. Chairman and 
Senator Pressler. It is indeed an honor to be here, although I must 
say I am a little conflicted by this, because we see this as a great 
brain drain from our great city and State, if you decide to sencThim 
forward. But we think it is 

The Chairman. They can spare him, can't they? I remember Her- 
man Talmadge said it would increase the intelligence levels of both 
areas. [Laughter.] 

Ms. Schroeder. Well, I am not so sure in ours that it may not 
lower ours in Denver, but it will certainly help the District. And 
so I really am very honored to be here to tell you a little bit about 
Steve Kaplan. 

I think if you looked at his resume, all you have to do is look 
at page 2 and find out that he was the counsel and one of the main 
people involved in redistricting in our State in 1980. And I think 
anyone who can come out of redistricting and everybody thinks is 
fair, you do not really need to say much more, because it is one of 
those things that is not pleasant anywhere. And yet Steve came out 
and everybody felt he had done just an absolutely terrific job. 

As you can see, he was a terrific scholar on his undergraduate 
work. He has been a very distinguished lawyer. He has had great 
public experience in Denver working for the mayor, working in his 
cabinet, and working on transportation problems with our airport. 

So, you name it and he has been readily involved. And as I say, 
we really hate to see him go, because he has been such a terrific 
asset. But I cannot think of anybody better in the Department of 
Transportation, so I am deeply honored to be here. You cannot go 
wrong with Steve Kaplan. 

And I thank you for letting me appear. 

The Chairman. Well, we thank you. Congressman Skaggs. 

STATEMENT OF HON. DAVID E. SKAGGS, U.S. 
REPRESENTATIVE FROM COLORADO 

Mr. Skaggs. Thank you, Mr. Chairman, Senator Pressler. I am 
very pleased to be able to join Pat Schroeder in commending to the 
subcommittee and the full committee Steve Kaplan as general 
counsel for the Department of Transportation. 

He is a man I have enioyed working with and learning from. He 
is a colleague in the Colorado bar and I think he would bring a 
very distinguished repertoire of talents and experience to this post. 

As Pat indicated, he not only has an exemplary academic and 
professional record, but as with the nominee for Deputy Secretary, 
Steve has really exemplified a commitment to public service at all 
levels, State, local, and Federal, with some experience on the Hill 
which will stand him in good stead. And I am delighted to add my 



20 

voice in support of Steve and hope that you will act favorably on 
his nomination. 

Thank you very much. 

The Chairman. Very good. You both are welcome to stay with 
the nominee. Or if you have other engagements, we understand. 

Ms. ScHROEDER. Thank you very mucn. 

The Chairman. Thank you both very, very much. Mr. Kaplan, 
you have heard the concerns of the committee with respect to the 
previous nominee in maritime and aviation and other matters, spe- 
cifically the legal concerns between the National Transportation 
Safety Board and the Federal Aviation Administration. 

Let me yield to Senator Pressler. 

Senator Pressler. Yes. Well, I guess you heard my earlier ques- 
tion on that matter. And we are trying to find out the relationship 
between the two. Maybe you are not familiar with all the facts, but 
there were three letters that went warning about a certain type of 
propeller hub and no warning was ever given to the plane owners. 

And indeed, the NTSB predicted an additional catastrophic 
crash, unless something was done. And now such a directive has 
been issued. But there were two, at least two crashes that we know 
of that occurred. 

What is your — how do we deal with that problem? 

STATEMENT OF STEPHEN H. KAPLAN, NOMINEE TO BE GEN- 
ERAL COUNSEL OF THE DEPARTMENT OF TRANSPOR- 
TATION 

Mr. Kaplan. Senator, during the transition I had the opportunity 
with now Secretary Pena to spend a fair amount of time with the 
NTSB and explore the relationship between that board and the 
FAA and the Department of Transportation. 

And it is clear that there is a good, ongoing relationship. They 
have different roles, different responsibilities. I cannot tell you 
what the facts are in this specific tragedy. But I do know, as you 
indicated, that a vast majority of the recommendations made to the 
FAA by the NTSB are followed. 

Senator Pressler. Yes, about 90 percent of them are followed. 
I was curious as to why this one was not, after 2 or 3 years. 

Mr. Kaplan. I cannot answer that. And as you heard, Mr. Dow- 
ney indicated that is being reviewed. 

Senator Pressler. OK I guess he will send over a statement. I 
would ask you to send — why don't you join in his statement or send 
your own over later today. I am not going to hold anything up here, 
but I want to call people's attention to this because there is concern 
among small aircraft owners as to whether there are other letters 
that NTSB has sent that are not acted on. Of course, they cannot 
not act on all of them. 

But what is their standard over there? And as I understand it, 
that office appoints directly, reports directly to the Secretary, so we 
are very interested in seeing an answer. 

Mr. Kaplan. And you will have one. And, as you know, being 
from Colorado, it is not unlike South Dakota. There are many 
small planes and unfortunately, in our mountains there are all too 
many accidents. So, it is something for which we have a special 
sensitivity. 



21 

Senator Pressler. That is all I have. 

The Chairman. Very good. I see where you heretofore had the 
Secretary Pena as your client. You have got him this far. I guess 
you can take him even further. 

Mr. Kaplan. I hope so, with your support, Mr. Chairman. Thank 
you. 

The Chairman. I think he will be lucky to have you. Thank you 
very much, Mr. Kaplan. And what we will do is keep the record 
open for any questions by our colleagues and try to report it out 
this week. 

Mr. Kaplan. I will be pleased to respond. Thank you very much. 

[The prepared statement, biographical data, and prehearing 
questions and answers of Mr. Kaplan follow:] 

Prepared Statement of Stephen H. Kaplan 

Mr. Chairman, Senator Danforth and Members of the Committee. It is indeed an 
honor to appear before you as you consider my nomination to be General Counsel 
of the Department of Transportation. It is a privilege to have been nominated by 
the president, and I am truly excited about the opportunity to serve again with Sec- 
retary Pena, who is providing dynamic, effective and creative leadership at the De- 
partment. 

Much of my professional life has been dedicated to public service, having served 
as Legislative Assistant to a Member of Congress, as a First Assistant Attorney 
General for the State of Colorado, and as Denver City Attorney. I have seen the im- 
portance of transportation to urban families trying to get their children to health 
care clinics, and to potato farmers trying to ship their crops across the country. I 
was directly involved in the new Denver airport project, and thus understand what 
can happen when a national transportation strategy comes together with a strong 
community consensus. I have learned that transportation decisions can and must 
be made with increasing concern for our environment. I understand that transpor- 
tation can be the lifeblood of communities, and can lead to economic development 
and job creation. 

Of paramount importance, however, must always be concern for safety — safety of 
consumers, communities and employees. 

It is transportation which fuels our hope for the future — hope for an improved 
quality of life, and for a safer, more efficient transportation system that will enable 
us to compete internationally, with strong competition at home. Putting people first 
is the foundation for successful transportation policy. 

The General Counsel's Office can play an important role in these issues, initially 
by providing the highest quality legal advice and representation. We can offer lead- 
ership to see that Congressional mandates are addressed more expeditiously, and 
that common sense is a part of the regulatory process. We can be creative in seeking 
solutions to complex problems, and we can listen thoughtfully to those who have 
ideas and concerns. We can work more closely with the Justice Department and 
other agencies such as EPA to craft the most effective Federal position. We can en- 
courage problem-solving partnerships with the private sector as we search for new 
approaches and directions. We can take steps to foster competition and to protect 
the consumer, just as we can take steps to enhance safety in transportation. We can 
be even more sensitive to the relationship between transportation and our environ- 
ment. We can address difficult procurement issues and contracting problems. And 
we can negotiate effectively, aggressively and creatively. 

The issues facing the transportation industry, as well as consumers, grow increas- 
ingly complex. It is only by working with the industry, and with industry employees, 
that we can understand the opportunities of the future, of defense conversion, of re- 
search and high technology, and of competing in a global economy. 

I look forward to working with the Committee and its highly professional staff. 
If there are any questions, I would be pleased to respond. 



Biographical Data 

Name: Kaplan, Stephen Howard; address: 818 Marion, Denver, CO 80218; busi- 
ness address: 370 Seventeenth Street, 47th Floor, Denver, CO 80202. 



22 

Position to which nominated: General Counsel, Department of Transportation; 
date of nomination: April 22, 1993. 

Date of birth: May 23, 1947; place of birth: Tulsa, OK. 

Marital status: Married; full name of spouse: Jeanne L. Slavin; names and ages 
of children: Frances Leslie Kaplan, 13; and Michael Ethan Kaplan, 10. 

Education: Harvard College, 9/65-6/69, A.B. Cum Laude; and Harvard Law 
School, 9/70-6/73, J.D. 

Employment: 1/90-present, Davis, Graham & Stubbs, Denver, CO, Attorney (of 
counsel), (Note: I am currently on leave from my law firm, serving as an intermit- 
tent consultant to the Department of Transportation); 9/90-12/90, Hensel Phelps 
Construction Co., Greeley, CO, Consultant; 8/83-8/90, City/County of Denver, Den- 
ver, CO, City Attorney; 8/81-8/83, Kelly, Haglund, Gamsey & Kahn, Denver, CO, 
Associate, Partner; 8/76-7/81, Colorado Attorney General Office, Denver, CO, Assist- 
ant, First Assistant Attorney General; 8/73-6/76, Congressman James R. Jones (D- 
OK), Washington, DC, Legislative Assistant; summer 1972, Fried, Frank, Harris, 
Shriver & Jacobson, New York, NY, Summer Law Clerk; summer 1971, U.S. De- 
partment of Housing and Urban Development, Washington, DC, Intern/Assistant to 
the Under Secretary; and summer 1969, Metro Taxi, Cambridge, MA, Taxi Driver. 

Government experience: Deputy, Clinton-Gore Transportation Transition Cluster, 
1992; City Attorney, City and County of Denver, CO, 1983-90; Assistant and then 
First Assistant Attorney General, State of Colorado, 1976-81; Legislative Assistant, 
Congressman James R. Jones (D-OK), 1973-76; Chairman, City and County of Den- 
ver Ethics Advisory Board, 1983-90; Member, State Board on Teacher and FVofes- 
sional Services Standards, 1992-93; Member, Denver Housing Trust Council, 1986- 
90; and Member, Denver Community Historic Preservation Task Force, 1991-92. 

Political affiliations: 1992: Colorado Democratic Party (Clinton-Gore), $250; Colo- 
rado Democratic Party, $50; Campbell for Senate, $150; Lamm for Senate, $100; 
Callihan for Congress, $100; DeHerrera for County Commissioner, $50; Peggy 
Lamm for State House, $25; Skaggs for Congress, $50; Committee for DeGette, $35; 
and Committee for Judge Phillips, $35. 1991: Wirth for Senate, $250; Colorado 
Democratic Party, $200; Early for Mayor, $275; Sandos for Council, $100; Reynolds 
Campaign Committee, $50; Linkhart Committee, $50; Crider for Auditor, $100; and 
Doerring for Council, $50. 1990: Peiia for Denver, $21; Friends for Carl Levin, $20; 
Gantt for Senate, $25; Colorado Democratic Party, $20; and Woodward for Attorney 
General, $100. 

1989: None. 1988: Pena for Denver, $71; Mares for State House, $25; Pascoe for 
State Senate, $25; District 6 Democrats, $10; Ezzard for Congress, $25; and Skaggs 
for Congress, $25. 1987: Pena for Denver, $521; Colorado Democratic Party, $70; 
Webb for Auditor, $25; and Early for DA, $30. 1986: Colorado Democratic Party, 
$65; Edens for State Senate, $25; Committee for Wirth, $100; Committee for Romer 
for Governor, $50; Jones for Senate, $100; and Campbell Campaign, $15. 1985: 
None. 1984: AFL-€IO COPE, $20; Flahive for State House, $25; Dick for U.S. Sen- 
ate, $25; and Denver Democratic Party, $25. Note: This reflects a review of check 
registers, which may be incomplete for the earlier years. It also does not include 
contributions to ballot issue committees that did not seem requested. 

Memberships: Colorado, Denver, and Oklahoma Bar Associations; Trustee, Denver 
Zoological Foundation; Board Member and Vice President, Denver Children's Mu- 
seum; Board Member, Safe House for Battered Women; Colorado Anti-Defamation 
League (Board); Colorado American Jewish Committee (Board); Capitol Hill United 
Neighborhood (Member); Citizens for Quality Schools (Board); Dora Moore Elemen- 
tary School Collaborative Decisionmaking Team (Business Representative); 
Worldport Partners, Inc. (Board); Denver Athletic Club; Denver Museum of Natural 
History (Member); Denver Art Museum (Member); and Denver Bar Association 
Committee on Minority Firms — Pilot Project. 

Honors and awards: Harvard University's Henry Russell Shaw Fellowship (1969- 
70); Harvard College National Honorary Scholarship (1965); and Metro City Attor- 
neys' Award for Management (1985) and for Legal Jurisprudence (1987). 

Published writings: Generally this has involved continuing legal education presen- 
tations, primarily on ethics for public sector attorneys. These outlines are made 
available to participants but are not published in the traditional sense. In the fall 
of 1992, I wrote an article for the Colorado Real Estate Journal on due diligence 
issues in purchasing land near the new Denver airport. 



23 

QuEiyrioNS Asked by Senator Hollings and Answers Thereto by Mr. Kaplan 

GENERAL 

Question 1. Please describe your goals and objectives if confirmed as General 
Counsel. What will be your priorities for action in this position? 

Answer. My first objective, if confirmed would be to provide the highest quality 
legal counsel to the Secretary and to oversee the legal activities of the Department 
on his behalf. I believe an active legal stance can substantially improve agency per- 
formance and avoid pitfalls that distract from the primary objectives of the Depart- 
ment. The General Counsel can also contribute directly to achievement of the Sec- 
retary's policy objectives. I am aware that the General Counsel oversees a broad 
range of regulatory, enforcement, and legislative activity that has a substantial ef- 
fect on policy, and thereby directly affects the regulated parties and the public. 
Therefore, I would work especially hard to see that the President's goal, to serve 
the "customer" better, is fulfilled in these areas. In addition, I would work to see 
that common sense is a part of our strong, creative, clear, and effective legal efforts. 

Question 2. Given the size of the staff of the Office of General Counsel and its 
many important re^onsibilities, have you considered the adequacy of resources 
within the General Counsel's Oflice and, if so, have you identified potential meas- 
ures to address any shortfalls? 

Answer. I have been advised that the General Counsel staff has been decreasing 
somewhat over the past several fiscal years, despite the continuing responsibilities 
placed on the office. The President has asked that the agencies undertake a real 
effort to "work smarter" with existing resources, and I take that as the challenge 
in making the Greneral Counsel's Office work well. I would seek additional resources 
through the budget process if I learn that this is justified, but I understand the 
budget constraints, and the goal of doing more with less. 

Question 3. When do you foresee DOT issuing final drug and alcohol regulations 
as required under the Omnibus Transportation Employee Testing Act of 1991? 

Answer. I know the Secretary has been briefed on this rulemaking and has di- 
rected that the staff expedite completion of final rules. While I am not in a position 
to predict the Department's schedule for the rule, I would, if confirmed, have a 
major responsibility for this project. I would strive to fulfill the statutory mandate 
quickly, because I know the Secretary has made it a clear priority to get all man- 
dated rules completed on time. This is a highly complex matter, involving the issu- 
ance of a group of 18 proposed rules in December, for close to seven million safety- 
sensitive transportation industry employees. This rulemaking would receive active 
attention and follow-through. 

SURFACE TRANSPORTATION 

Question 4. Secretary Pena stated at his confirmation hearing that DOT will give 
a high priority to providing Administration leadership to end the truck "under- 
charge" litigation crisis. If confirmed, what specific steps will you take as General 
Counsel to develop an Administration policy and provide leadership on this issue? 

Answer. Several Supreme Court decisions during the past three years have made 
it clear that a legislative solution to the "undercharge" crisis is needed. I look for- 
ward to consulting with all the interested parties to this issue, as well as carefully 
examining the several bills — including Senator Exon's bill (S. 412) — that address the 
issue. Secretary Pena is seeking a solution that would not only provide an equitable 
resolution of pending undercharge claims, but would also ensure that the problem 
does not recur. If confirmed, I would look forward to working with you and the other 
members of this Committee toward an equitable resolution. 

Question 5. The Interstate Commerce Commission (ICC) is currently assessing its 
administrative implementation of the filed tariff doctrine, including the prospects 
for electronic tariff filing. What role do you envision DOT taking with regard to de- 
veloping a policy addressing these and other critical issues affecting trucking eco- 
nomic regulation? 

Answer. I would assume that the Department's position with respect to electronic 
tariff filing at the ICC will flow logically from its position on the broader issue of 
a legislative solution to the shipper undercharge problem and on further deregula- 
tion of trucking. It makes no sense to contemplate spending millions for a new elec- 
tronic tariff filing system if the tariff filing requirement itself might need to be re- 
considered. Before we can decide what the tariff filing system of the 21st century 
will be, we need to ascertain what the tariff filing requirement of the future should 
be. 



24 

Question 6. If confirmed, what DOT policy or regulatory action, by DOT will you 
advocate, if any, in response to the Supreme Court's recent decision in CSXT v. 
Easterwood? 

Answer. CSXT v. Easterwood involved the question of whether, pursuant to the 
Federal Rail Safety Act of 1970, regulations promulgated by the Federal Highway 
Administration and the Federal Railroad Administration preempted certain state 
laws relating to rail crossing safety and allowable train speed. The Supreme Court 
held that DOT's regulations preempted state law (1) as to rail-highway crossings 
only where the crossings have been improved with federal funds, and (2) as to train 
sp)eeds, in all circumstances. The conclusions reached by the Court were the same 
as those urged by the United States in its filing before the Court The significance 
of this decision to railroads is that they may regain liable under state law to provide 
a safe crossing in circumstances where crossings have not been improved pursuant 
to the federal program. 

In light of the Court's decision, I would expect that DOT will encourage increased 
participation by railroads in our important rail-highway crossing program in order 
to improve more crossings, thereby enhancing the over-all safety of rail-highway 
crossings nationwide. If confirmed, I would urge FRA and FHWA to review the deci- 
sion and, together with my office, to determine an appropriate regulatory approach 
consistent with the Court's conclusions. Given the Court's holding on the effect of 
express preemptive action by the Secretary, I anticipate that future regulatory ac- 
tions by the Department under the Federal Rail Safety Act, will be taken in a man- 
ner that indicates those instances in which the Department intends its regulations 
to preempt state law. 

Question 7. During the previous Administration, the Federal Railroad Adminis- 
tration consistently missed deadlines to issue rules in a number of critical safety 
areas mandated by Congress. If confirmed as General Counsel, what steps will you 
take to ensure regulatory compliance by all DOT agencies with the statutory man- 
dates of Congress? 

Answer. Tnis is a top priority for the Secretary. In my preliminary meetings with 
members of the General Counsel's Office, they have already undertaken a review, 
with recommendations, as to how the Department can improve m this area. One of 
my goals would be to realized demonstrated improvement in this area. I also believe 
that we need to have more ongoing dealing with the appropriate committee should 
problems arise or recommendations be appropriate. 

Question 8. In the area of railroad labor relations, will you, if confirmed as Gen- 
eral Counsel, advocate that DOT take an active role in any reassessment of railroad 
labor laws now on the books? Do you believe that DOT should intervene before the 
ICC in proceedings addressing railroad labor protection and similar issues in order 
to represent the Administration's views in this area? 

Answer. Any reassessment of railroad labor laws will need the active involvement 
of rail labor and management I believe that the Secretary's position would be that 
the Department should assist the parties in such an endeavor, and I agree that that 
could lead to the most constructive outcome. I think the Department should closely 
monitor all proceedings before the ICC and become involved in cases raising major 
transportation issues, including those of railroad labor protection. 

Question 9. The ICC has undertaken a comprehensive review of the intercity bus 
industry, focusing on the nature of the competitive relationship between and among 
Greyhound Lines and the independent carriers. In order to preserve and enhance 
intercity bus service, what role do you, if confirmed as General Counsel, see DOT 
taking in matters which may be before the ICC and the courts? 

Answer. I am fully aware of the importance of the intercity bus industry. Regular 
route intercity bus service is essential for key segments of the population — the 
young, the elaerly, and those with below average incomes — who cannot avail them- 
selves of other forms of transportation. Along with Secretary Pena, I believe that 
the intercity bus industry is a critical element in the transportation system, and it 
is important that we maintain and encourage a safe, efilcient, and connected na- 
tional intercity bus network. 

Each matter should be examined on its merits, giving due regard for the need to 
encourage a "seamless", interconnected transportation service without intruding on 
a company's right to make reasonable business decisions. We have already offered 
the ICC our cooperation in their comprehensive review of the intercity bus industry, 
including sharing our information and expertise. We should participate at the ICC 
in significant cases with national importance. 

Question 10. During Secretary Pena's confirmation hearing, the Committee ex- 
pressed its concern that many of the key safety provisions of the Hazardous Mate- 
rials Uniform Transportation Safety Act of 1990 nave not been implemented. What 



25 

will you do to fulfill Secretary Pena's commitment to investigate this problem and 
meet the statutory deadlines set by Congress? 

Answer. Since his confirmation hearings, I am aware that Secretary Pefia has ex- 
pressed to the Department's top managers his great concern about meeting statu- 
tory deadlines for rules, and has directed that prompt action be taken to complete 
all actions mandated by, among others, the Hazaraous Materials Transportation 
Uniform Safety Act of 1990 (HMTUSA). I am told DOT has already implemented 
most of the HMTUSA requirements, and I would, if confirmed, work with the agen- 
cies to implement the Secretary's mandate to expeditiously meet statutory dead- 
lines. 

Question 11. If confirmed as General Counsel, how will you advise Secretary Pefia 
on the question of whether federal law should explicitly provide for competition to 
the National Railroad Passenger Corporation (Amtrak) with respect to the operation 
of new proposed high-speed rail services? 

Answer. While I have not considered the issue in depth, which it deserves, it 
would appear that there is something to be said for maintaining a coordinated rail 

f)assenger system, including the high-speed components, under one carrier, particu- 
arly where Amtrak already operates multiple trains per day. On the other hand, 
I am told that the process whereby Amtrak competes ibr operating commuter serv- 
ice has been healthy, and something similar may be appropriate for intercity service 
when a State provides a significant share of operating and capital expense, particu- 
larly if Amtrak does not already operate frequent service. 

I understand that the Administration's high-speed rail bill permits the State or 
States proposing a corridor to propose who the operator will be. 

Question 12. The Intermoaal Surface Transportation Efficiency Act of 1991 
(ISTEA) mandated that DOT take a number of specific steps to initiate a magnetic 
levitation (maglev) prototype development program, including establishment of an 
interagency maglev prototype ofiice, among other requirements. How do you see the 
role of DOT General Counsel in ensuring DOT's compliance with this law and other 
laws, given that DOT to date has not complied with several of these statutory re- 
quirements? 

Answer. As I understand it, Congress prohibited use of funds provided under 
dot's FYI 1993 Appropriations Act for compliance with those ISTEA requirements. 
However, President Chnton has proposed in his FY 1994 Budget that the Depart- 
ment begin development of the maglev prototype generally in line with the approach 
outlined in ISTEA. If Congress agrees with that proposal in the FY 1994 Appropria- 
tions Act, DOT will begin development of the prototype, including establisnment of 
the maglev office. As General Counsel, I would work with my colleagues to ensure 
compliance with statutory direction in this and all other areas of DOT activity. 

Question 13. Please provide your view, if confirmed as General Counsel, of DOT's 
position and policy involvement with respect to assumption of liability by operators 
of proposed new lugh-speed rail services? 

Answer. I am not particularly familiar with this issue, but I understand involves 
the freight railroads' concerns about tort liability under State law. Given that States 
will be the Department's partners in developing high-speed rail corridors, it seems 
appropriate for the States that develop high-speed rail corridors to address this 
issue with the railroads involved in their corridors before the Federal Government 
considers addressing State tort law in this area. 

Amtrak currently has contracts with the freight railroads over which it operates 
that specify each entity's liability in the event oian accident If Amtrak is the opera- 
tor, I would assume that, should a different arrangement be desired for high-speed 
operations, the parties will negotiate it The Department should become involved in 
developing policy in this area only if it becomes apparent that it is a stumbling 
block to the development of these high-speed systems. 

MERCHANT MARINE 

Question 14. Reform of the U.S. maritime industry has become the most signifi- 
cant issue facing that industry. At his confirmation hearing before this Committee, 
Secretary Pena stated that maritime reform was one of his top two priorities. If con- 
firmed as General Counsel, are there policies and programs in whose implementa- 
tion you would be involved to promote the U.S. -flag fleet? 

Answer. In light of the recognized problems of the maritime industry and its im- 
portance to the national economy and defense, it is disappointing that budgetary 
constraints will preclude an Administration initiative on maritime reform this year. 
The Administration clearly recognizes that something basic is needed if we are to 
prevent the U.S. -flag merchant fleet from disappearing. The decision, based on par- 
ticularly trying budget circumstances this year, does not mean that maritime reform 



26 

is being abandoned. I'm sure Secretary Peiia intends to keep maritime reform high 
on his list for action. He believes it is essential that U.S. carriers and other trans- 
portation modes be able to compete globally. 

I understand that DOT staff are now waiting on completion of two studies, the 
Shipyard Study in October and the DoD Requirements Analysis in August, that to- 
gether will provide the basis for new work. I would want to be directly involved in 
this important area. 

Question 15. The U.S. cargo preference laws require that all military cargo and 
up to 75 percent of other U.S. government impelled cargoes be carried on U.S. -flag 
ships. Are there ways to better ensure that these laws are enforced? 

Answer. Enforcement of the preference laws is the responsibility of the various 

fovemment agencies. The Maritime Administration (MARAD) has been mandated 
y the ConCT-ess to monitor and report on compliance achieved by the government 
agencies. Therefore, it is incumbent on the agencies to assure tight controls on com- 
pliance. The real problem is perceived to be the additional costs which may be war- 
ranted but which the agencies do not want to bear, and their support for this pro- 
gram is not strong. 

AVIATION 

Question 16. The Reagan and Bush Administrations all too often cited "difTicul- 
ties" in issuing regulations. What steps do you believe are needed to streamline the 
rulemaking process? How would such steps impact aviation rules? 

Answer. As part of the Department's "Reinventing Government" review, a task 
force is looking to see if changes in the structure of the rulemaking process can help 
improve the timeliness of rules. The most important step we can take is for manage- 
ment to commit to meeting rulemaking deadlines and issuing all rules in a timely 
manner. The Secretary has made this commitment and has communicated it to rule- 
making officials throughout the Department. 

I am told that officials of the Office of Management and Budget have said that, 
in the Clinton Administration, the 0MB rulemaking review function will not be 
used to delay or frustrate agency implementation of statutory mandates. This will 
be a great gain for all rulemaking, not just aviation. 

The Department's major task in aviation rules is to enhance the safety of the 
traveling public. Unnecessary delay in improving safety is unacceptable to the De- 
partment, and the Federal Aviation Administration is working hard to shorten the 
time between the initiation of a rulemaking project and its transmission to the Sec- 
retary for approval. 

It is necessary to recognize that, in rulemaking, an agency must study complex 
technical and economic issues thoroughly, seek out and respond fully to comments 
from interested members of the public, and weigh careilly the policy consequences 
of its regulatory actions. The agency must do so in the context of many priorities 
chasing finite resources. The commitment to doing the job in a timely manner 
should not be at the expense of doing the job right 

Question 17. The Department recently took action to prevent Northwest Airlines 
from adversely affecting the services of a new entrant air carrier. Do you foresee 
that DOT will continue to enforce aggressively its existing authority under section 
411 of the Federal Aviation Act? 

Answer. I am advised that the Department worked closely with the Justice De- 
partment on this matter. However, given the Department's own, independent au- 
thority, and the need to assure strong competition and lower the barriers to new 
entrants, all with a paramount concern for safety, I would expect the Department 
to scrutinize these matters on a case-by-case basis as they arise to assure compli- 
ance with the law. 

Question 18. The Acting Administrator of the Federal Aviation Administration 
(FAA) recently made suggestions for change in the passenger facility charge pro- 
gram. Under existing law, the FAA has significant authority to implement this pro- 
gram. Is it your view that such changes are consistent with existing law? 

Answer. 1 understand that the interpretation of the 1990 Passenger Facility 
Charge legislation is one of great complexity, and has already been the subject of 
many lawyer hours. Rather than add to the potential for confusion by voicing views 
immediately, I believe I should take the time to review the language and the argu- 
ments in detail before venturing an opinion. This is especially true in an area where 
bondholders and new or pending bond issues can sometimes be greatly affected by 
any apparently new information. Because of my own experience in Denver, I am 
particularly sensitive to this issue. 

Question 19. Recent press reports suggested that DOT was considering changes 
to the current buy-sell rule for slots and to the route sale process. Routes and slots 



27 

are now treated essentially as corporate assets, rather than government-granted 
rights to serve the public. What role do you believe is appropriate for DOT in re- 
viewing sales of government rights? Are you considering repeal of the buy-sell rule? 
Answer. I understand that several members of Congress have asked DOT to reex- 
amine the way slots are allocated. Also, Secretary Pena has said how important it 
is that we make sure we are addressing issues in the best possible way. DOT and 
FAA staff are therefore looking into whether it would be feasible to conduct a study 
of the slot issue. Given the tentativeness of the assignment at this point, it would 
be unwise to speculate on the future status of operating rights as a "government" 
or "corporate" asset There is an ongoing review in the specific context of U.S.Air's 
routes to Heathrow, which it had to divest pursuant to tne consent order from the 
Justice Department, and the unique characteristics of this matter overall may have 
generated some of this discussion. 

NATIONAL TRANSPORTATION TRAFFIC SAFETY ADMINISTRATION 

Question 20. In your answers to the Committee's Questions, you mention that you 
understand the issues pertaining to the relationship between state and local govern- 
ments and the Federal Government in implementing policies and programs. With 
f)articular respect to highway traffic safety initiatives what difficulties do you be- 
ieve exists for states implementing these types of programs? How can the federal 
government better assist the states with their highway and vehicle safety programs? 

Answer. When the federal government adopts national standards or deadlines, it 
does so with an eye toward federalism. The dynamic created can often be positive 
and constructive. But the federal government can also assist by making its regula- 
tions dear, by priority grant money and technical assistance to states and local enti- 
ties where appropriate, and by working with states and local officials to fashion con- 
structive approacnes that comply with the letter and spirit of the law. 

Question 21. How do you plan to ensure that the National Transportation Traflic 
Safety Administration properly carries out its regulatory responsibilities and meets 
the deadlines for the requirements established under ISTEA? 

Answer. Secretary Pena has been dear in his instructions to top managers that 
fulfillment of statutory mandates in the regulatory area particularly is one of his 
top priorities. I recognize that the General Counsel has a great responsibility in this 
area to follow through. If confirmed, I expect to make the completion of mandated 
rulemakings a top priority. 



STATEMENT BY SENATOR BEN NIGHTHORSE CAMPBELI^-MONDAY, MAY 17, 1993 

Mr. Chairman, I am most pleased to have the opportunity to recommend to the 
committee my good friend, Mr. Stephen Kaplan. Mr. Kaplan's nomination nearly 
completes President Clinton's team at the Department of Transportation. I am ea- 
gerly looking forward to working with what can only be described as a remarkably 
talented team. 

I know Mr. Kaplan best from his work with former Denver mayor and current 
Transportation Secretary, Federico Pena. Mr. Kaplan served as a member of Mayor 
Pena's cabinet and was instrumental in many oi the Pena team's major successes. 
The soon-to-be-open Denver International Airport, Denver's new convention center, 
and the attraction of the National League's new Colorado Rockies to Denver can all 
be credited to the hard work performed by Federico and his staff. I know Mr. 
Kaplan's work with the Peiia administration was essential to these successes. 

One of the most impressive accomplishments of the Peiia administration, beyond 
the extraordinary improvements in the Denver and Colorado economies, was the re- 
finement of the city's ethics guidelines. With Mr. Kaplan's guidance, the Mayor de- 
veloped policies limiting the outside employment practices of staff attorneys; as a 
result, the professionalism of the Mayor's Cabinet, and the public trust in the office, 
grew dramatically. The quality and diversity of candidates for positions within the 
Mayor's ofiice also grew as a direct result of these policy changes. 

Mr. Kaplan, who received both his undergraduate and law degrees from Harvard 
University, has extensive experience both within and outside government. As a 
former Capitol Hill staffer, Mr. Kaplan understands, I am sure, how this institution 
works and will be receptive to policy decisions coming from this committee. 

Thank you again, Mr. Chairman, for the opportunity to address the committee. 
I look forward to Mr. Kaplan's speedy confirmation and to working with him on de- 
veloping and refining our nation's transportation policies. 

The Chairman. Thank you very, very much. By the way, I wel- 
come your wife, Jeanne. She is in the audience there. We are de- 



28 

lighted to see her. And Senator Campbell also vyanted to be here 
and he has a letter for the record, which we will include at this 
point. 

And incidentally, Senator Brown also wants a letter in the 
record. You have to be introduced right. You have got something 
going here. 

[The information referred to follows:] 

Letter from Senator Hank Brown 

May 14, 1993. 

The Honorable ERNEST HOLLINGS, 
U.S. Senate, 
Washington, DC 20510 

The Honorable John Danforth, 
U.S. Senate, 
Washington, DC 20510 

Dear Friends and Colleagues: Regrettably, I cannot join you toady to introduce 
Stephen Kaplan as General Counsel-designate of the U.S. Department of Transpor- 
tation. While you will have the opportunity to discuss Steve's qualifications and 
plans for the Department of Transportation, I would like to share with you some 
background concerning his service to the people of the State of Colorado. 

Steve's record of service has established him as a positive force in the lives of oth- 
ers. After obtaining a law degree from Harvard and completing 3 years service to 
Congressman James R. Jones, Steve served as a First Attorney General in Colorado. 

In 1983, Steve Kaplan moved to Citv Hall where he joined now Secretary of 
Transportation Fedenco Pena's Mayoral Cabinet as City Attorney of Denver. As 
City Attorney, Steve managed an office of approximately 60 attorneys and 35 sup- 

eort staff. His office represented Denver in a complex and diverse range of issues. 
[e was responsible for the legal matters related to the new Denver International 
Airport, construction and operation of the Colorado Convention Center, and acquir- 
ing the Colorado Rockies, Colorado's first Major League Baseball Team. 

Additionally, Steve Kaplan represented Denver on city contracts, zoning and land 
use, employment, and Minority Business Enterprise and Women's Business Enter- 

grise programs. During his tenure, he expanded the diversity of the City Attome/s 
iffice. Moreover, Steve was able to attract attorneys from major law firms through- 
out Colorado. 

As Denver's City Attorney, Steve Kaplan had the opportunity to learn about the 
importance of our Nation's transportation infrastructure, the relationships between 
Federal, State, and local governments in transportation issues. 

After retiring as City Attorney in 1990, Steve Kaplan, his wife Jeanne, and their 
two children have remained in Colorado. Steve also served as "Of Counsel" to a 
major Denver law firm where he worked on public finance, public-private projects, 
public policy, State and local government law, construction and other public con- 
tracts. Most recently, he served as a Deputy on President Clinton's Transition 
Transportation Center. 

I know you join me in welcoming Steve Kaplan in Washington, DC. Thank you 
for giving me the opportunity to introduce him to you. 
Sincerely, 

Hank Brown, 

U.S. Senator. 

Mr. Kaplan. Thank you very much. I look forward to it. 

The Chairman. Thank you very much. 

We will have Senator Feinstein, if she can — I thought I saw her. 
There we go. Mr. Huerta is the Associate Deputy Secretary for 
Intermodal Transportation. 

Senator Feinstein. 

STATEMENT OF HON. DIANE FEINSTEIN, U.S. SENATOR FROM 

CALIFORNIA 

Senator FEINSTEIN. Thank you very much, Mr. Chairman, mem- 
bers of the committee. I am very pleased to be able to appear be- 



29 

fore you today to introduce Michael Huerta. He is a fellow native 
Califomian. To become Associate Deputy Secretary of Transpor- 
tation and Director of the Office of Intermodalism. I guess that is 
a new word for the 1990's. 

As I understand it, the goal of this division of the Department 
of Transportation is to focus attention of how to coordinate all 
forms of transportation, to move people and goods in the most en- 
ergy-efficient and cost-effective manner possible. 

I believe you have found the right person for the job. Michael 
Huerta, by way of his training and hands-on experience, is well 
suited to this assignment. He is someone who looks for innovative, 
practical solutions to improve mobility and productivity and then 
moves forward with specific plans. 

In San Francisco and New York, Mr. Huerta has worked for the 
last 7 years on the specific task of moving goods from ships from 
our ports to grocery stores in the homes of our communities. 

During the last 4 years, as executive director of the Port of San 
Francisco, Mr. Huerta managed an agency with an annual operat- 
ing budget of $35 million and a staff of more than 240 people. He 
completed the port's first strategic plan in its 130-year history and 
he undertook a staff reorganization to emphasize customer service. 

Maybe one of the best indications of his innovative and practical 
problem-solving skills resulted in a financially prudent trade of 
public lands for privately held property in San Francisco. This was 
actually something, as a matter of fact, that I began, when I was 
mayor of San Francisco. 

But he completed the negotiations for the city and county to 
transfer lands making way for a 315-acre residential and commer- 
cial development known as Mission Bay. In exchange, the port re- 
ceived lands necessary for expansion of its container facilities, val- 
ued at substantially more than the lands being transferred. 

Similar achievements have marked his career before his post in 
San Francisco. From 1986 to 1989, he served as the commis- 
sioner — that is the department head — ^for New York City's Depart- 
ment of Ports. In New York, he led the department as it developed 
and administered marine, air, rail, and truck facilities throughout 
the city. 

In addition, the New York port constructed, operated, and regu- 
lated the city's public markets. 

Mr. Huerta earned a master's degree from the Woodrow Wilson 
School of Public and International Affairs at Princeton University. 
He earned his undergraduate degree from the University of Califor- 
nia at Riverside. 

I am very pleased, Mr. Chairman, to bring my strong endorse- 
ment to Michael Huerta's nomination. I believe he will bring stra- 
tegic planning and innovative problem solving to the Department 
of Transportation. And I think that those who have worked with 
him, both in New York City and San Francisco, would agree that 
he is superbly qualified. 

Thank you very much. 

The Chairman. Well, I am sure that he is. And we thank you 
very, very much, Senator Feinstein. You can stay with us or excuse 
yourself if you have other appointments. We want to welcome Mi- 



30 

chael's parents who are in the audience, Solomon, Delia Huerta. Do 
I pronounce that correctly? 

Mr. Huerta. Huerta, that's correct. 

The Chairman. Well, we are glad to have them. Congressman 
Nancy Pelosi wanted to make it. She could not, due to a conflict 
in schedule, but she sent a letter in support. 

[The information referred to follows:] 

Letter From Congresswoman Nancy Pelosi 

May 15, 1993. 

Senator Ernest Holungs, 
U.S. Senate. 
Washington, DC 20510 

Dear Mr. Chairman: I am writing to offer my strong support for the confirmation 
of Michael Huerta as Associate Deputy Secretary of Transportation for 
Intermodalism. 

As the Executive Director of the Port of San Francisco, a self-supporting agency 
responsible for fostering commerce, fisheries, navigation and recreation along San 
Francisco's waterfront, Michael Huerta earned a well-deserved reputation for inno- 
vative and visionary leadership. 

Under his leadership, the Port completed the first strategic plan in its 130-year 
history; developed its first capital plan which prioritized critical infrastructure im- 
provements; reorganized and retrained the staff for the transportation market of the 
1990's and negotiated plans for mixed-use developments — while at the same time 
substantially increased the Port's container volume and terminal efficiency. 

Knowing firsthand of Michael Huerta's energy, vision, intelligence, and strong 
background in transportation issues, I strongly urge the Committee to approve his 
nomination. 

Sincerely, 

Nancy Pelosi, 
Member of Congress. 

The Chairman. Thank you. Senator. 

Senator Feinstein. Thank you very much, Senator. 

The Chairman. Mr. Huerta, with respect to intermodalism, the 
big emphasis at the moment of course is maglev and high-speed 
rail. And I think we are going to have to get high-speed rail trans- 
portation before we move into the very expensive intermodal sys- 
tem that you are interested in. 

But in the financing, since you know all of these tricks, how 
much would you say we need high-speed rail between New York 
and Miami? How would you expect the intervening States on a 
matching basis to want to pay for that? In other words, if you are 
Governor of Virginia, of North Carolina, of South Carolina, and of 
Georgia, you want the train to slow down. [Laughter.] 

Mr. Huerta. That is right. 

The Chairman. How do you sell that to the taxpayers of South 
Carolina, saying what we really need is a train to go faster through 
our State, and by the way, we want you to pay for it? Where did 
that idea come from? 

STATEMENT OF MICHAEL P. HUERTA, NOMINEE TO BE 
ASSOCIATE DEPUTY SECRETARY OF TRANSPORTATION 

Mr. Huerta. Those kinds of questions. Senator, Mr. Chairman, 
are certainly indicative of the sorts of tradeoffs you have to deal 
with when you are considering intermodal transportation or trans- 
portation generally. 



31 

I have dealt with similar issues, in how do you move the freight 
train out of the port of San Francisco when it happens to run 
through a very sensitive neighborhood in our citv and a bunch of 
other neighborhoods on its way to the interior of the country. 

One of the things — I do not have a clear idea at this pomt as to 
how we would resolve that specific problem, but I have some 
thoughts as to how we would structure looking at that kind of a 
problem. 

The Secretary has mentioned in the past the need to have key 
transportation corridors. And perhaps you can focus on what are 
key areas that are deemed to be in the national interests, to pro- 
vide for energy efficient and cost efficient movement of passengers 
and freight from one point to the other. 

Now in looking at that, a very important thing to consider is of 
course, what are the impacts on the communities that are along 
the route that might suffer as a result of having the route go 
through there? And it seems to me that if you are going to be look- 
ing at the benefits of having high-speed transportation, you, at the 
same time have to consider what are the impacts along the way 
and weigh them one against the other. 

And so it is a careful set of tradeoffs that you need to look at 
in looking at these sorts of problems. And that is something that 
I am very committed to in consultation with all the affected par- 
ties. 

[The prepared statement, biographical data, and prehearing 
questions and answers of Mr. Huerta follow:] 

Prepared Statement of Michael P. Huerta 

Mr. Chairman, Senator Danforth, members of the connmittee, I am honored to 
come before you today. I would like to thank you for the opportunity to address the 
committee and to respond to your questions as you consioer my nomination to the 
position of Associate Deputy Secretary of Transportation and Director of the Office 
of Intermodalism. I am quite enthusiastic about the opportunity this position rep- 
resents. Should the Senate confirm my nomination, I look forward to working with 
the Coneress, industry and the users of the transportation system to work toward 
the development of a truly unified, integrated transportation system. 

As you know the Office of Intermodalism was created by Title V of the Inter- 
modal Surface Transportation Efficiency Act of 1991, better known as ISTEA. The 
Office was given the responsibility for coordinating Federal policy on intermodal 
transportation and initiating policies to promote efficient intermodal transportation 
in the United States. 

i believe that my experience and education have helped me to develop the skills 
needed to carry out these responsibilities. Since college, I have been interested in 

gubhc service. I have a Masters degree in public affairs from the Woodrow Wilson 
chool of Public and International Affairs at Princeton University. I received my BA 
in political science from the University of California at Riverside. 

For over seven years, I have worked in transportation related agencies at the local 
level. From 1986 to 1989, I was Commissioner of the New York City Department 
of Ports, International Trade & Commerce. Since 1989, I have been Executive Direc- 
tor of the Port of San Francisco. The Port of San Francisco, like all ports, is by defi- 
nition an intermodal facility. Every day, cargo is transferred from ships to trucks 
and railroads and back again for distribution to and from points throughout the 
United States. Intermodal freight transportation has proven itself to be a winner 
and has greatly enhanced commerce ana trade. As Port Director in San Francisco, 
I placed heavy emphasis on improving rail and road access to our marine terminals. 
I firmly believe that by rebuilding the transportation infrastructure and enhancing 
intermodal connections, you enhance our competitiveness. 

Although many ports focus primarily on tne movement of freight, in San Fran- 
cisco, I was fortunate to become involved in the movement of people as well. The 
San Francisco Bay Area is home to one of the nation's best d!eveloped passenger 
ferry systems. Although ferry transportation is nothing new, the Loma Prieta earth- 



32 

quake of 1989, and the resulting damage to our roads and bridges, caused the peo- 
ple in our region to place greater emphasis on ferries as a clean and efficient mode 
of transportation. In recent years, we have placed greater emphasis on improving 
the linkage between ferries and other modes of transportation to provide for easier 
transfers of passengers from one mode to the next. 

Our nation has much to be proud of in the development of intermodal transpor- 
tation. Innovations such as the containership and the double stack train began here. 
Nevertheless, there is much more to be done. The President and Vice President have 
talked about reinventing government. In keeping with this, I hope to help broaden 
our thinking about transportation. ISTEA provided a clear basis for thinking about 
transportation in terms of overall mobility instead of limiting our thinking to build- 
ing, for example, the best highway or the best transit system. We need to continue 
to look at the best ways to move through the entire transportation system from one 
mode to another, not just how well a single segment works. As we build and rebuild 
the nation's transportation infrastructure, we must ensure that connections and 
choices between transportation modes are enhanced. And in enhancing these 
choices, we must be sensitive to issues and concerns involved in moving freight as 
well as moving people. Finally, we must take care to make transportation decisions 
that are sensitive to our natural environment while enhancing our competitiveness 
in the world economy. 

I hope to focus the Office of Intermodalism toward finding practical solutions for 
specific intermodal issues and problems, mince I have been in the port industry, I 
have direct knowledge and experience in intermodal operations and some of the 
problems that exist out in the field. In my home state of California, rail access to 
the port system can be enhanced to improve transportation efTiciency and air qual- 
ity. More recently, I heard about Atlanta's proposal to develop an intermodal pas- 
senger terminal to facilitate the movement of people throughout the Atlanta area 
for the 1996 Olympic Games. Throughout the nation, I believe there are ways to 
improve intermodal linkages between automobiles, our most common mode of trans- 
portation for people, and other modes. I believe the Office of Intermodalism can play 
a facilitating and coordinating role to help find solutions to these and other prob- 
lems. 

If confirmed by the Senate, I look forward to the opportunity to work with you 
and the Congress toward resolving the transportation issues faced by our nation. 

I would be happy to answer any questions that you might have at this time or 
at any time in the future. Thank you again for the opportunity to appear before you 
today. 



Biographical Data 

Name: Huerta, Michael Peter; address: 1932 Leavenworth Street, San Francisco, 
CA 94133; business address: Port of San Francisco, Ferry Bldg., San Francisco, CA 
94111. 

Position to which nominated: Associate Deputy Secretary. 

Date of birth: November 18, 1956; place of oirth: Riverside, CA. 

Marital status: Single, never married. 

Education: Woodrow Wilson School of Public and International Affairs, Princeton 
University, 1978-80, MPA; and University of California at Riverside, Riverside, CA, 
1974-78, BA. 



Employment Record 



From-To 


Name of Employer 


Type of Work 


1/89-Present 


Port of San Francisco 


Management of a Port Authority. 


3/86- 1/89 


City of New York 


Commissioner (Agency Head). 


1/85- 3/86 


Coopers & Lybrand 


Advisor assigned to the Government of St. Kitts 


7/80-12/84 
5/79- 9/79 


Coopers & Lybrand 

US. Mission to NATO 


and Nevis, West Indies. Tech. assistance pro- 
gram funded by U.S. A.I.D. to assist certain 
Eastern Caribbean govts, with investment pro- 
motion and export development. 

Supervising Consultant and Consultant. 

Research and analysis of defense planning issues. 









Government experience: Executive Director, Port of San Francisco, California (1/ 
89-Present); Committee Member, California Transportation Directions: Mobility for 
2010, California Department of Transportation (3/86-1189); Intermittent Consultant 



33 

with the U.S. Agency for International Development (1/83-3/86); Consultant, Gov- 
ernment of the District of Columbia, Office of the Deputy Mayor for Economic Devel- 
opment (1982); Consultant, State of Illinois, Department of Commerce and Commu- 
nity Affairs (1982); Consultant, U.S. Department of Energy (1981); and Consultant, 
U.S. Selective Service System (1980-1981). 

Political affiliations: Contributor, Democratic National Committee, 1992 ($250); 
Contributor, Jim Gonzalez for Supervisor, San Francisco, California, 1992 ($300); 
Contributor, Feinstein for Senate, California, 1992 ($550); Contributor and Volun- 
teer, Art Agnos for Mayor, San Francisco, California, 1991 ($500); and Volunteer, 
Save the Waterfront: No on proposition H, San Francisco, California, 1990. 

Memberships: American Association of Port Authorities (Chairman, Commerce 
Committee); California Association of Port authorities (President); Project Open 
Hand (Board Member); Galeria de la Raza (Board Member); University of CaliTor- 
nia, Riverside Alumni Association (Board Member); University of California, San 
Francisco Foundation (Board Member); San Francisco Bay Columbus Quincentenary 
Committee (Board Member); Friends of the Port of San Francisco (Board Member); 
California Council for International Trade (Board Member); Bay Dredging Action 
Coalition (Executive Committee); World Trade Club (Honorary Member); St. Francis 
Yacht Club (Honorary Member); City Club of San Francisco (Member); and Com- 
monwealth Club of California (Member). 

Honors and awards: Achievement Award, Hispanic Communitv Fund of the Bay 
Area, San Francisco, CA, 1992; Outstanding Young Graduate, U(JR Alumni Associa- 
tion, University of California, Riverside, 1986; Princeton Graduate Fellowship; and 
California State Scholarship. 

Published writings: Huerta, Michael P., "Executive Director's Report," Wharfside, 
published quarterly and distributed by the Port of San Francisco, California, 1989 
to present; Huerta, Michael P., "State of the Ports," World Wide Shioping, October- 
November 1992; and Cooper, Richard V.L., and Huerta, Michael P., 'Military Train- 
ing and Youth Employment: A Descriptive Survey," in Job Training for Youth, 
edited by Robert E. Taylor, Howard Rosen and Frank C. Pratzner, Columbus, Ohio: 
The National Center for Research in Vocational Education, The Ohio State Univer- 
sity, 1982. 



Questions Asked by Senator Hollings and Answers Thereto by Mr. Huerta 

Question 1. The position for which you have been nominated was only recently 
established. In your opinion, has the newly created office been successful so far? 

Answer. In my opinion, the Office of Intermodalism has been very successful in 
many different areas. Since its establishment in July 1992 the Office has promoted 
the national intermodal policy of Congress through presentations to national intei- 
est groups, site visits to metropolitan planning organizations (MPOs), and in meet- 
ings with State DOT representatives and with transportation providers across the 
country. In addition, the Office has published a Department-wide survey of inter- 
modal activities in January 1993, and a Preliminary Intermodal Data Inventory of 
USDOT databases in March 1993. The Office is also conducting regional Intermodal 
Coordination workshops on cross-cutting issues to improve communications and co- 
ordination between Federal regional offices. 

I consider this to be only a beginning for the Office of Intermodalism and look 
forward to building substantially on these activities. I believe that the Office can 
take a more proactive role in identifying specific intermodal problems and taking 
actions to resolve them. 

Question 2. What do you see as the mission of the Office of Intermodalism? 

Answer. I believe that the mission of the Office of Intermodalism is to provide the 
Departmental leadership and coordination in developing intermodal transportation 
systems to move people and goods in an energy efficient manner, provide the foun- 
dation for improved productivity growth, strengthen the Nation's ability to compete 
in the global economy, and obtain the optimum yield from the Nation's transpor- 
tation resources. 

The Office serves as the Department of Transportation's principal advocate for 
intermodal transportation by coordinating and initiating transportation policies to 
promote efficient intermodal movements. Further, under my leadership, the Office 
will support the will of Congress, Secretary Pefla and the Administration by pub- 
licizing and promoting intermodal initiatives and programs within the Federal, 
State and local governments and in partnership with industry. 

Question 3. Tlie intended goal of the Office of Intermodalism is to obtain the opti- 
mum yield from the transportation resources of the United States. In order to real- 
ize this goal, what do you believe to be the main priorities of the Office? 



34 

Answer. In my conversations with Secretary Pena, he has indicated that it is his 
objective to make intermodal movements of passengers and freight as seamless as 
possible between their points of origin and ultimate destinations. The first priority 
will be to identify the bottlenecks and choke points that frustrate the flows of people 
and goods and to work to eliminate them. 

As an equal, if not greater priority, the Office must advocate intermodal solutions 
to transportation problems by focusing on the movement of people and goods from 
one point to another and encouraging the various modes to work together. 

Question 4. Intermodalism is receiving increased attention. In your opinion, how 
does the capability of the U.S. intermodal network compare with that of our trading 
partners? 

Answer. I feel that it is necessary to diflerentiate between passenger and freight 
transportation systems when considering the eflectiveness of the intermodal trans- 
portation systems of the United States and its overseas trading partners. 

As regards freight transportation, the U.S. compares very favorably to our trading 
partners. The U.S. -flag shipping companies were the pioneers of intermodal con- 
tainer transportation, the development of containerships, and the development of in- 
novations such as double stack trains and information management technologies for 
tracking cargoes. In addition, the geography of the United States with our great in- 
land spaces makes it possible to utilize the efficiencies of long-distance rail freight 
movements. By comparison, the European railroads are largely dedicated to pas- 
senger movements and the European rail system is not structured to facilitate ready 
movement of rail freight from one nation to another. In the Far East, intermodal 
movements are largely confined to truck movements. 

With regard to passenger transportation, the intermodal linkages between modes 
of transportation in the United States are less well developed than in some Euro- 
pean nations where the national rail systems tie directly to major airports and in 
some cases, the airlines actually operate passenger trains to feed the airports. 

Question 5. President Clinton has indicated that infrastructure improvement is 
one of his high economic priorities. Is intermodalism not a key element in infra- 
structure improvement? 

Answer. Secretary Pena clearly recognizes the link between the infrastructure 
and intermodalism. In a recent speech, he said: "Before intermodal connections can 
be truly seamless, we must build and strengthen the surface transportation infra- 
structure * * *" The Secretary stated further: "* * * how much we spend [on infra- 
structure] is as important is making sure that the individual facilities we build work 
as a well integrated whole." 

I fully support the two themes embodied in these statements: building the infra- 
structure linkages that will lead to seamless transportation, and before we build, 
planning to make sure that the facilities we build in this Nation are the ones we 
really need to "obtain the optimum yield from the Nation's transportation re- 
sources." 

Question 6. As you know, the U.S.-flag maritime fleet is in economic decline. 
What is the role of intermodalism in improving the economic well-being of that in- 
dustry? 

Answer. It is my opinion that one of the reasons that the U.S. -flag fleet has been 
able to hold on as long as it has is that the major U.S. players have been at the 
forefront of intermodafism in the world shipping industry. The international com- 
petitive problem arises from the world industry adopting many of the intermodal 
advances first developed in the United States. As a result, it is more difficult for 
the U.S. industry, with higher operating costs, to compete solely on the basis of its 
technological advantage. Although future developments in intermodal technology 
will certainly benefit the U.S. flag merchant fleet, they should not be relied upon 
as the only remedy to help the industrv compete worldwide. 

Question 7. A major problem for rail-truck intermodal service in the eastern Unit- 
ed States is the length of the haul. What do you envision is the role of DOT in help- 
ing to overcome the obstacles of serving these shorter haul markets? 

Answer. The time and labor costs associated with cargo handling for short dis- 
tance rail-truck intermodal service may make these shipments less efficient than 
service using only trucks. Nevertheless, air quality or traflic congestion consider- 
ations might warrant development of intermodal freight routes in the eastern U.S. 
and I believe this is an important area for future study. 

The Department is committed to improving the Nation's entire transportation sys- 
tem throu^ more effective planning, the provision of better access, and the elimi- 
nation of counterproductive regulations. These activities will minimize the time and 
handling costs for all rail-truck movements, regardless of the total transport dis- 
tance. 



35 

Question 8. What is your view regarding whether intermodal freight faciUties are 
eUgible for federal funoing under the Intermodal Surface Transportation Efficiency 
Act if such a facility would relieve highway congestion and deterioration, and help 
improve safety and air quality? 

Answer. Regarding intermodal freight project eligibility for flexible funding under 
ISTEA, the Federal Highway Administration has produced a policy interpretation 
of eligible rail-related activities on February 9, 1993, indicating that intermodal rail- 
freight projects would be eligible for funding if studies prove that the traffic diverted 
to rail could significantly contribute to the attainment of ambient air quality stand- 
ards in a nonattainment area. I would be happy to provide the Committee with copy 
of this policy interpretation memorandum. I believe that the Office of Intermodalism 
must continue to work with the modal administrations to identify additional ISTEA 
program opportunities for funding intermodal freight projects. 

MEMORANDUM 

Subject: Information: Use of Federal-Aid Highway Funds for Improvements to 
Rail Facilities 

From: Associate Administrator for Program Development 

To: Regional Federal Highway Administrators Federal Lands Highway Program 
Administrator 

The purpose of this memorandum is to provide guidance on the extent the ISTEA 
has impacted eligibility of Federal-aid hignway funding for improvements to rail fa- 
cilities. 

Section 2 of the ISTEA discusses the importance of developing a unified, inter- 
connected intermodal transportation system. It presents broad policy statements in 
support of this goal. However, Section 2 in itself does not provide the authority or 
establish eligibility criteria for using Federal-aid highway funds for specific activi- 
ties. Rather, it is necessary to turn to Title 23 and the accompanying highway laws 
to determine the manner in which Federal-aid highway funds can support inter- 
modal activities such as rail transportation. 

Under Title 23, Federal highway funds have long been able to participate in safe- 
ty improvements at railroad-highway crossings. Under 23 U.S.C. 130(a), crossing 
safety work has even included relocation of portion of a rail line where this is less 
costly than eliminating existing crossings by grade separations or relocation of the 
highway. These types of crossing safety improvements continue to be eligible for 
Federal funding. 

Certain types of Federal funding have also been eligible to support capital im- 

firovements to rail transit systems. Prior to the ISTEA, urban funds could be used 
or this purpose. After ISTEA Surface Transportation Program (STP) funds, includ- 
ing other Federal funding sources transferred to the STP category, can be used for 
capital improvements for rail transit projects eligible for funding under the Federal 
Transit Act. Even National Highway System (NHS) funds can be used for rail tran- 
sit projects in some limited circumstances as described in 23 U.S.C. 103(i)(3). 

In addition, Congestion Mitigation and Air Quality (CMAQ) Improvement Pro- 
gram funds can be used for a rail improvement where it meets the purposes of that 
program. For example, since 23 U.S.C. 149(b) uses the terms, "a transportation 
project or program," rail projects that are included In an approved State Implemen- 
tation Plan (SIP) and have air Quality benefits are eligible. Other rail projects not 
included in an approved SEP could be eligible for CMAQ funds if it is demonstrated 
that they have air quality benefits for the pollutant(s) for which the area is in non- 
attainment. All transportation projects funded under the CMAQ program must be 
located in a nonattainment area and must have demonstrated air quality benefits 
for the pollutant(s) for which the area is classified as nonattainment. 

A new provision to Title 23 added by the ISTEA (23 U.S.C. 133(b)(1)) allows STP 
funds to be used for "* * * construction or reconstruction [highway and bridges] 
necessary to accommodate other transportation modes * * *" This same general 
provision is also incorporated into amended 23 U.S.C. 142(c) which extends the ap- 
plication of this "accommodation" feature to NHS, CMAQ and interstate Mainte- 
nance funds. We view this new feature of Title 23 as allowing use of the designated 
Federal funding sources to pay for adjustments to highway elements to accommo- 
date a rail line. This might include lengthening or increased vertical clearances of 
bridges, adjusting drainage facilities, lighting, signing or utilities, or making minor 
adjustments to highway alignments. 

The "accommodation' feature does not allow use of funds to purchase right-of-way 
for a rail line, to purchase right-of-way to relocate a highway so that a rail line may 
occupy existing highway right-of-way, or to construct the rail line or any roadside 
features whose primary function is related to an adjacent rail line. However, where 



36 

an existing highway faciHty directly constrains operations of an existing rail line (for 
example, a hidiway structure with limited vertical clearance over a rail line may 
not allow for double-stack rail operations), adjustments to the rail line including re- 
location of the line and purchase of right-of-way would be an allowable use of Fed- 
eral funds where it can be shown to be more cost-effective than eligible adjustments 
to the existing highway facility. 

Another new provision added to Title 23 (23 U.S.C. 133(b)(8) and a new definition 
in 23 U.S.C. 101(a)) allows STP funds set-aside for transportation enhancement ac- 
tivities to be used for the rehabilitation and operation of historic railroad facilities. 
A historic railroad facility should be so designated by the State Historic Preserva- 
tion Officer or other governing entity with appropriate authority. 

Questions regarding the overall policy presented in this memorandum may be di- 
rected to Mr. Jerry L. Poston, Chief, Federal-Aid Program Branch (202-366-4652). 
Questions concerning specific uses of CMAQ funds or STP transportation enhance- 
ment funds should b« directed to Mr. James M. Shrouds, Chief, Noise and Air Qual- 
ity Branch (202-366-4836) or Mr. Fred Skaer, Chief, Environmental Programs 
Branch (202-366-2065), respectively. 

Anthony R. Kane. 

Question 9. What do you believe should be DOT's role in fostering the growth and 
development of intermodal passenger transportation terminals? 

Answer. During this Administration, the Department will support the growth and 
development of intermodal passenger terminals through several courses of action: 
examining regulatory opportunities, streamlining project approval, seeking funding 
flexibility, and just as important, promoting good ideas. However, the actual deci- 
sions for funding the development of intermodal passenger terminals lies with the 
Metropolitan Planning Organizations and State agencies. Intermodal passenger 
transportation terminals will be an integral part of future planning and construction 
activity. 

The Department will continue to employ memorandums of agreement, signed by 
all participating agencies, to identify lead offices and contact points for expediting 
the processing of documents and construction activities associated with these very 
complex projects. The Department also will continue to encourage State and local 
decisionmakers to shift and pool funds from several sources to finance projects like 
intermodal passenger terminals to meet the needs of their communities. 

Question 10. How do you evaluate the prospects for high-speed ground transpor- 
tation systems, if connected to airports as well as downtown transportation termi- 
nals, to substitute for short-haul aviation segments in the present aviation hub and 
spoke system? 

Answer. Hub and spoke systems permit greater flight frequencies between city 
pairs which do not have the large volumes of point to point traffic required to sup- 
port frequent service on large aircraft. High speed rail systems are generally consid- 
ered to be most effective in areas of high passenger volume. With this consideration 
in mind, I believe that high-speed rail is not likely to be an alternative to short- 
haul aviation segments because the smaller communities served by the air system 
do not -generate sufficient traffic and therefore, in the foreseeable future, high-speed 
rail will be limited to transportation corridors between major metropolitan cities 
which are in themselves hubs. 

High-speed rail, however, can be an attractive alternative to airline travel be- 
tween hubs when those hubs are a short haul from each other. The development 
of additional high-speed rail transportation corridors is being evaluated by the Fed- 
eral Railroad Administration under the Administration's High-Speed Rail initiative 
(see attached). 

DOT PROPOSES $1.3 BILLION FOR HIGH-SPEED RAIL INITIATIVE 

Transportation Secretary Federico Peiia today joined members of Congress to 
unveil a comprehensive, 5-year, $1.3 billion high-speed rail initiative that represents 
a major step toward making good on the vast economic, environmental, and techno- 
logical promise of high-speed ground transportation. 

In announcing the program, Pena said, "A strong, technologically advanced rail 
system to transport passengers is critical to our economic competitiveness. We want 
to work in partnership with States and local communities to build high-speed rail 
corridors that will create jobs and spur growth, and with the private companies and 
research institutions that are working hard to develop the next generation of rail 
technology." 

States and cities from coast to coast have expressed interest in developing inter- 
city high-speed rail corridors. Nearly $1 billion in funding under the plan announced 
toady will allow projects to advance on a number of these corridors. 



37 

"High-speed rail has an important role to play in relieving highway and airport 
congestion in intercity corridors around the country," Peiia added. "High-speed rail 
can help cut down on pollution, ease costly travel delays, and complement air travel 
routes to create a seamless, intermodal transportation network. And, supporting 
these new technologies also has the potential to ease the transition of defense com- 
panies and workers to the civilian sector." 

The Secretary noted that the initiative also makes good on President Clinton's 
commitment during his campaign to support development of high-speed rail service 
and technology. 

Peiia said that the $1.3 billion program would fund investment in various rail cor- 
ridors, as well as development of magnetic levitation (maglev) prototype technology. 
This Federal investment is expected to generate a total of $2 Dillion m investment 
in high-speed rail infrastructure, including matching State, local, and private funds. 
The proposed legislation to implement the high-speed initiative will be sent to Con- 
gress today. 

Peiia said, "State and local ofllcials from San Diego and Boston have told me they 
see high-speed rail as a critical part of their area transportation networks. We'll be 
supporting these initiatives as well as development of the new technologies that will 
keep the United States competitive in the glooal marketplace." 

Over the next 5 years, the package will make available $982 million to State and 
local governments to finance nigh-speed rail improvement projects. This is the first 
separate program of Federal financial support for implementation of hi^h-speed rail 
corridors outside the Northeast Corridor and will help upgrade existing rail cor- 
ridors that could ultimately allow speeds of up to 150 mph for passenger service. 
Funding, to be administered by the Federal Railroad Administration, will be tar- 
geted to projects that serve two or more major metropolitan areas that are no more 
than 600 miles apart. 

Among the cities that are eligible to seek FRA funding under this program are 
five priority high-speed rail corridors designated by DOT last year. The are: 

• Chicago to St. Louis, Detroit, and Milwaukee. 

• Miami-Orlando-Tampa. 

• San Diego-Los Angeles-Bay Area and Sacramento via the San Joaquin Valley. 

• Eugene-Portland-Seattle-Vancouver, B.C. in Canada. 

• Washington, DC-Richmond-Raleigh-Charlotte. 

The existing New York State high-speed corridor (New York City-Albany-Buffalo) 
is also eligible. Other corridors, proposed by the States and meeting criteria set 
forth in the bill, can also apply to the Secretary for inclusion in the program. North- 
east Corridor improvements from Washington, DC to Boston will continue to be 
funded under a separate program. 

Pena said that like other DOT grant programs, the high-speed rail initiative 
would be a partnership with State and local governments and the private sector. 
Because the Government seeks a true partnership, individual improvements may re- 
ceive Federal funding of up to 80 percent, but the Federal share irom the high-speed 
rail program for a total group of improvements on a corridor cannot exceed 50 per- 
cent of tne public contribution. 

In addition to the corridor grant program, the initiative announced today will 
make available nearly $300 million to support technology development, including 
work on a maglev prototype. The prototype is expected to be superior to that being 
developed by other countries and, in addition to the benefits of keeping the U.S. 
transportation system technologically competitive, also would reduce pollution since 
it does not have to rely on petroleum fuel. 

The administration's program also includes a $25 million applied research compo- 
nent. This funding is intended to ensure that as rail-related scientific advances 
occur they are incorporated into high-speed rail development. 

The Chairman. Well, watch that one closely for us, because we 
want to and we will cooperate. We are in a situation right here 
with Union Station trying to get everything to move together. It 
took us years to do it. We finally had to accomplish it through the 
Appropriations Committee and because we could not get things 
moving through the committee itself. 

We can get things moving through this committee if you make 
sound suggestions. But when they come out in the initial stage and 
say, "We are going to have funding on a matching basis here for 
the several States to have the train move at high speed without 
stopping throughout that particular State, and by the way, that 



BOSTON PUBLIC LIBRARY 



3 9999 05982 189 

State is going to pay for it." I want you to come down to Columbia, 
SC, and help me to explain that to them. [Laughter.] 

Mr. HUERTA. I would be delighted to. 

The Chairman. Senator Pressler. 

Senator Pressler. The General Accounting Office has issued a 
report this past month on intermodal freight transportation. The 
report suggests that the Department of Transportation's office of 
intermodalism, which you will head, established under the Inter- 
modal Surface Transportation Efficiency Act, should work with 
State and local transportation agencies and industries to provide 
funding for rail-truck intermodal freight facilities. 

Now the GAO report encourages the Transportation Secretary to 
issue a determination of whether rail-truck facilities should qualify 
for Federal funding under ISTEA, given that they would relieve 
highway congestion and deterioration. 

So, my question is that most studies demonstrate that motor car- 
riers are essentially being subsidized, given the amount of damage 
heavy trucks do to our highways. In light of this fact, what is your 
response to the recommendation by GAO? 

Mr. HuERTA. As a former director of the New York City Depart- 
ment of Ports and currently the director of the Port of San Fran- 
cisco, I have a great interest in rail and truck access to marine ter- 
minal facilities and transportation facilities generally. 

And it is my view that it was the intent of the Congress, through 
ISTEA, to ensure that rail freight projects and truck access projects 
would qualify for funding under the provisions of ISTEA. 

Recently, in February, the Federal Highway Administration re- 
leased a policy interpretation looking at precisely this issue. And 
I would be happy to provide a copy of it for you and the committee. 

But in it, the salient point is that it determined that these sorts 
of projects would be eligible for funding if studies proved that the 
traffic diverted to rail, for example, could significantly contribute to 
the attainment of ambient air quality standards in a nonattain- 
ment area. 

Now that is one specific area that could be looked at. And I think 
this is something that bears some further looking into as well. 

Senator Pressler. Thank you very much. 

The Chairman. Thank you very, very much, Mr. Huerta. We will 
leave the record open for any questions by our other colleagues who 
could not make it here this afternoon. We will try to move the nom- 
ination out to the floor of the Senate for confirmation later this 
week. 

Senator Pressler. I have some additional questions I will sub- 
mit for the record. 

The Chairman. Thank you very much. The committee will be in 
recess, subject to the call of the Chair. 

[Whereupon, at 2:30 p.m., the hearing was adjourned.] 

O 



ISBN 0-16-041265-X 



9 780160"412653 



90000